The crypto market remains under pressure as total market capitalization hovers near $2.17 trillion, with capital steadily draining from the space. Fragile economic conditions and potential Federal Reserve action threaten further price declines, with analyst Benjamin Cowen expecting the U.S. 10-year Treasury yield to reclaim 5%, potentially forcing a rate hike that tightens capital flow into risk assets like Bitcoin.
The crypto market has stayed under pressure as capital steadily drains out of the space, with total market capitalization for digital assets now hovering near $2.17 trillion while valuations struggle to find a floor. Fragile economic conditions and the prospect of fresh action from the Federal Reserve remain a key threat to the outlook.
Crypto analyst Benjamin Cowen expects the U.S. 10-year Treasury yield to keep gaining strength and sees a high chance of it reclaiming the 5% mark in the near term. The U.S. 30-year bond yield crossed 5.28% on July 31, one of its highest levels since 2007.
Cowen noted that lowering rates does not automatically translate into lower yields, pointing to 2024-2025 as his case study. “The Fed cut rates from 5.5% to 3.75% from 2024-2025 and yet the 30 year yield is higher today than when interest rates were 5.5%!” he stated.
A yield holding above 5% would eventually force the Fed to raise rates and tighten the flow of capital into risk assets. A hike tends to restrict capital flow because borrowing grows more expensive, pushing investors toward stable assets over riskier bets.
That rotation toward safety already surfaced on Friday, when U.S.-listed products recorded a sharp spike in outflows and a visible drop in capital as the 30-year yield pushed to fresh highs. BTC and Hyperliquid sat on the losing side, with $265 million and $1.8 million pulled from the two assets, while other funds including Ethereum and Ripple saw thinner flows of $9 million and $7.7 million.
Capital across the market has thinned over the past few weeks. Stablecoins have seen heavy redemptions, with total supply down from $321.8 billion on May 22, with roughly $14.3 billion pulled from the market since, as most of the remaining stablecoin balance now sits idle instead of flowing into crypto.
