Bitcoin’s next move may depend more on the U.S. bond market than on the Federal Reserve’s interest-rate decisions, according to CoinShares, as rising Treasury yields coincide with slowing inflows into digital-asset funds.

In its October 8 market update, CoinShares reported that digital-asset funds had attracted roughly $11.1 billion since mid-July. Digital-asset funds — investment products that pool money into cryptocurrencies through vehicles such as exchange-traded products and trusts — are tracked in weekly flow reports widely used as a gauge of institutional demand. However, weekly inflows slowed as the 10-year U.S. Treasury yield climbed above 5.3%. The 30-year yield also reached 5.7%, placing borrowing costs near their highest levels in decades. The 10-year yield functions as a benchmark for borrowing costs across the economy, influencing mortgage rates and corporate financing, which is why bond-market moves draw attention well beyond fixed-income investors.

The focus is no longer limited to whether the Federal Reserve will raise interest rates again. Investors are also examining why Treasury yields continue to rise even as recent economic data points to slower growth.

Why Treasury Yields Matter for Bitcoin

Higher Treasury yields can pressure Bitcoin because government bonds offer returns with lower risk. Rising yields also increase borrowing costs, potentially leaving less capital available for cryptocurrency investments.

The effect on Bitcoin could vary, however, depending on what is driving yields higher. CoinShares has identified another possibility if the increase reflects concerns about the U.S. government’s ability to manage its debt.

James Butterfill, Head of Research at CoinShares, has examined the relationship between monetary conditions, investment flows and Bitcoin. The firm’s analysis suggests that concerns about government debt could lead some investors to consider Bitcoin as an alternative to traditional government-issued currencies. That framing rests on a structural difference: Bitcoin’s supply expands on a predetermined issuance schedule capped at 21 million coins, a design its proponents cite when arguing it sits outside fiscal and monetary policy.

For now, fund-flow data presents a different picture. Digital-asset funds have attracted billions of dollars since July, but new inflows have slowed while Treasury yields remain elevated. CoinShares is monitoring whether demand returns as investors assess the risks associated with government bonds.

Bond Market Pressures the Fed

Rising yields have also intensified scrutiny of Federal Reserve policy. Market analyst James E. Thorne argued that investors are demanding higher returns because they have lost confidence in the Fed’s approach. He cited San Francisco Fed research that linked roughly two-thirds of the recent increase in the 10-year yield to the term premium.

The Bond Market Is Losing Faith in the Fed the Term Premium says so. When will the Fed become competent? The rising Treasury term premium is a confidence problem. Investors are demanding more compensation to hold long-term bonds because they do not trust the Federal Reserve to… pic.twitter.com/UksGt496Z9 — James E. Thorne (@DrJStrategy) October 9, 2026

The term premium is the additional return investors demand for holding longer-term government bonds. Thorne said the increase reflected concerns that the Fed could keep interest rates too high for too long. He also questioned whether policymakers were responding quickly enough to signs that inflation was easing.

To support his argument, Thorne cited Dallas Fed trimmed mean PCE inflation of 2.2%. The trimmed mean PCE measure excludes the most extreme price changes in each spending category, making it a common gauge of underlying inflation. He also pointed to longer-term inflation expectations near 2.3%, saying these figures indicated that investors were not preparing for a sharp increase in inflation.

CoinShares meanwhile reported that the estimated probability of an October rate increase fell from 71% to 23% after weaker employment data.

Fed Treasury Purchases and Bitcoin Liquidity

Planned Treasury-bill purchases by the New York Fed have added another factor for Bitcoin investors to monitor. Crypto analyst Martini Guy reported that the central bank planned to purchase $3.891 billion in Treasury bills on October 9.

The operation has drawn attention to whether additional liquidity could support Bitcoin and other risk assets.

JUST IN: 🇺🇸 The New York Fed is set to purchase $3.891B of US Treasury bills today. That adds liquidity to the financial system, although this is a Treasury bill purchase operation rather than a new round of QE. For Bitcoin, additional liquidity can be supportive for risk… pic.twitter.com/LNeJGJVDJa — That Martini Guy ₿ (@MartiniGuyYT) October 9, 2026

Treasury purchases can add liquidity to financial markets, although routine operations differ from quantitative easing. Quantitative easing refers to sustained, large-scale asset purchases aimed at lowering longer-term borrowing costs and expanding the central bank’s balance sheet, whereas routine bill operations are used to manage short-term funding conditions. Greater liquidity can encourage cryptocurrency investment when traders have funds available and are willing to take risks Such purchases, however, do not guarantee increased demand for Bitcoin.

Martini Guy said the key question was whether the operation would improve market liquidity and encourage Bitcoin buying. CoinShares is also watching digital-asset fund flows for signs of renewed interest from institutional investors.

Together, these measures could help explain how Bitcoin responds while Treasury yields remain high. The next CoinShares weekly flow report and any further purchase announcements from the New York Fed will provide near-term markers for both dynamics.