US President Donald Trump’s plan to lower the 10-year yield by controlling inflation and reducing fiscal spending could have a positive impact on Bitcoin. The 10-year yield, which influences long-term loans, is seen as a risk-free rate that encourages borrowing and investment.
A declining 10-year yield typically signals a decrease in inflation expectations, making it easier for the Federal Reserve to cut interest rates further. This could lead to increased bullish momentum in risk assets like Bitcoin. However, some analysts question whether Trump’s plan will be successful, citing concerns about the impact of reduced fiscal spending on risk assets.
Treasury Secretary Scott Bessent has stated that lowering inflation is key to reducing borrowing costs and influencing the 10-year yield. Boosting energy supply could help achieve this goal. While a decrease in the budget deficit would lower yields and make it easier for the Fed to cut rates, experts warn that any reduction in spending could destabilize risk assets.
The current 10-year yield has dropped by 38 basis points to 4.42%, influenced by declining energy prices and non-inflationary growth. However, analysts at ING believe there may not be much room for further downward movement, citing an effective floor at around 4%. Experts advise enjoying the move lower while it lasts, as a big driver for a lower yield is hard to see.
Source: https://www.coindesk.com/markets/2025/02/06/trump-s-aim-to-lower-the-10-year-yield-and-its-implications-for-bitcoin