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Seven-year Treasury yield at 4.473% raises the bar for Bitcoin

The July 28 auction cleared at a 4.473% yield, 21.3 basis points above June, while demand stayed near normal with a 2.49 bid-to-cover ratio.

Reported · Written up by our desk · Market Structure

The US government sold $44 billion of seven-year debt on July 28, and the auction cleared at a 4.473% yield, according to CryptoSlate. That rate was 21.3 basis points higher than the 4.260% yield awarded at the prior June Treasury auction. The comparison matters for Bitcoin because Treasuries offer a government backed, contractual income stream, while Bitcoin does not. CryptoSlate notes that the yield effectively raises the “hurdle” investors need to clear, since BTC provides no comparable interest payments and can swing sharply in price. CryptoSlate also described how Treasury auctions work: investors submit bids indicating the size of debt they want and the minimum return they will accept, and the government awards the securities at the yield needed to sell the full offering. In this case, the July auction attracted $2.49 of bids for every $1 of debt offered, compared with 2.50 in June and about 2.48 on average across prior recent auctions. The outlet said the result should be viewed as a repricing of the return investors require to hold US debt, not a rejection of Treasuries. It also highlighted that higher Treasury yields change the direct comparison new capital faces when choosing between a seven-year, repayment at maturity versus Bitcoin’s potential for larger gains without a guaranteed return.

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