Declining Yields and the Rise of Safe-Haven Assets

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. In contrast, gold has increased in value by almost 5% over the same period. CryptoQuant analysts suggest that Bitcoin, often referred to as "digital gold," could similarly 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. A similar trend appears to be occurring in 2024, with gold rising from $2000 to nearly $2700. The CryptoQuant post on X underlines that Bitcoin, seen as digital gold, may potentially follow a similar pattern.


Analyst Insights

According to CryptoQuant analyst J.A. Maartunn, falling 13-week U.S. Treasury yields are contributing to the rise in safe-haven assets like gold. He emphasized that this decline is part of a broader macroeconomic picture, stating that falling yields often coincide with other factors such as recessions and changes in the money supply (M2).

Maartunn explained that during the 2007-2009 recession, the M2 money supply grew significantly, increasing the demand for safe-haven assets like gold. He noted, "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."


Optimism for Bitcoin

Speaking to The Block, Bitwise European Head of Research André Dragosch pointed out that the global money supply has now reached an all-time high. This development has historically signaled bullish trends for Bitcoin.

Dragosch stated, "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 generally expect that these rate-cutting expectations will continue to be a major positive driver for Bitcoin and cryptoassets."

He added, "We also think that the improvement in monetary policy expectations is most likely not yet reflected in the price of Bitcoin and that it's quite likely there will be a catch-up to these more positive monetary policy expectations."

As for Bitcoin’s current status, its price has gained a muted 1.4% in the past hour, sitting at around $61,114 at 10:49 a.m. ET, according to The Block’s Bitcoin Price Page.