Declining Yields and Rising Gold: Implications for Bitcoin

Yields on U.S. Treasury bills with maturities of up to three months have been declining since the U.S. Federal Reserve’s half-point interest rate cut on Sept. 18. During this period, gold has increased in value by almost 5%. According to CryptoQuant analysts, bitcoin, often referred to as “digital gold,” could benefit from the recent drop in 13-week Treasury bill yields.

Historical Context

In 2008, as the 13-week Treasury bill yields started to lower, gold prices soared from $590 to a peak of $1900 per ounce in 2011. Similar trends are emerging in 2024, with gold rising from $2000 to nearly $2700. CryptoQuant indicates that bitcoin, seen as ‘digital gold,’ may follow this pattern.


Insights from Analysts

CryptoQuant analyst J.A. Maartunn notes that falling 13-week Treasury yields are contributing to the rise in safe-haven assets like gold. He emphasized that this trend is part of a broader macroeconomic landscape.

“Falling yields often coincide with other factors such as recessions and changes in the money supply (M2),” Maartunn told The Block. He highlighted that during the 2007-2009 recession, the M2 money supply grew significantly, increasing the demand for safe-haven assets like gold.

“The pandemic saw an even more pronounced rise in the money supply, which fueled the demand for assets like bitcoin that governments cannot print easily,” he added.

Current Economic Indicators

M2 money supply has reached an all-time high. 

Bitwise European Head of Research André Dragosch noted that the global money supply has now reached an all-time high, which historically indicates bullish trends for bitcoin.

“Global money supply has just reached a new all-time high and is accelerating, and we know that historically bitcoin bull runs have been associated with global money supply expansion. We expect that these rate-cutting expectations will continue to drive bitcoin and cryptoassets positively,” Dragosch explained.

He added, “We also think that the improvement in monetary policy expectations is not yet reflected in the price of bitcoin, and it’s likely there will be a catch-up to these more positive monetary policy expectations.”

As of now, bitcoin’s price has gained a muted 1.4% in the past hour, sitting at around $61,114 according to The Block’s Bitcoin Price Page.