Bitcoin’s price is under scrutiny as outflows from US spot Bitcoin ETFs coincide with a surge in Treasury yields, exposing the cryptocurrency to significant market headwinds driven by broader risk-on rotations among institutional investors.
Data from Bank of America’s recent Global Fund Manager Survey reveals a sharp decrease in bond allocations, with managers turning increasingly underweight on fixed income assets—the deepest reduction recorded since mid-2022. Meanwhile, equity exposure has surged to a half of total allocations, reflecting a strong shift into risk assets. This “anti-duration” stance—meaning investors are avoiding long-term bonds due to rising yields—has become the dominant consensus among fund managers, shaping the macro environment around risk portfolios.
The rise in Treasury yields, led by the US 10-year yield hitting levels not seen since early 2025, increases the hurdle rate for investments that produce no yield, such as Bitcoin. As real yields climb, investors demand higher returns, making zero-income assets less attractive despite their potential upside. Bitcoin ETFs were expected to offer a stable institutional demand base, but recent weeks have shown sizeable withdrawals, with combined outflows crossing $1.6 billion over a ten-day span in mid-May. These outflows demonstrate that the institutional bid, while present, struggles to offset the immediate impact of rising bond yields.
The broader financial system maintains relatively loose conditions, according to the Chicago Fed’s National Financial Conditions Index, but tightening in Treasury markets is squeezing marginal risk assets. Bitcoin, as a highly liquid 24/7 asset with no contractual cash flows, tends to absorb initial selloffs before more illiquid holdings adjust. This pattern has kept Bitcoin trading near its $75,000 to $78,000 support zone, an area that has repeatedly cushioned macro-driven declines throughout the current cycle.
Despite the short-term stress, Bitcoin’s long-term narrative remains tied to its fixed supply and absence of sovereign backing or maturity schedules. Such characteristics position it as a potential hedge against structural concerns over government debt sustainability, inflation risks, and geopolitical tensions highlighted in recent global financial stability reports. However, in the current environment of rising real yields and rapid fund rotation, Bitcoin’s sensitivity to traditional market dynamics remains pronounced.