Will Bitcoin Drop Below $50,000 If U.S. Treasury Yields Surge Above 5%?
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Will Bitcoin Drop Below $50,000 If U.S. Treasury Yields Surge Above 5%?
Traders estimate a 70% probability that Bitcoin will fall below $55,000 in 2026 and a 46% probability it will fall below $45,000.
Navigating Web3 tides with focused insightsBy: Cointelegraph
Translated by: AiddiaoJP, Foresight News
During the U.S.-Iran war, Bitcoin has been one of the strongest-performing assets. However, Bitcoin’s upward momentum is now showing signs of exhaustion amid a “runaway” bond market.
Key Takeaways:
- If the U.S.-Iran conflict drags on, U.S. benchmark Treasury yields could rise by 200 basis points.
- Historical precedent suggests oil-related conflicts tend to fuel inflation and dampen risk appetite; accordingly, Bitcoin’s price could fall below $50,000 by 2026.
Oil Supply Shock Could Push U.S. Treasury Yields Above 5%
Since the U.S. and Israel launched strikes against Iran on February 28, the benchmark 10-year U.S. Treasury yield has climbed to approximately 4.42%, reaching a nine-month high.
Monthly performance of U.S. 2-year, 10-year, and 30-year Treasury yields. Source: TradingView
The 30-year Treasury yield rose to roughly 4.97%, while the 2-year yield edged up into the 3.95%–3.98% range.
War-driven surges in oil prices have intensified market concerns about rising inflation, pushing Treasury yields higher. Against this backdrop, markets widely expect no rate cuts within 2026.
U.S. President Donald Trump announced a five-day pause in military operations, temporarily easing immediate market concerns about attacks on Iranian energy infrastructure. However, Iran has denied engaging in any negotiations, and cross-border attacks continued as of Tuesday—indicating the conflict remains uncontained.
Source: X
Market observers express concern that U.S. Treasury yields face further upside risk. Technical analysts note that if the 10-year yield breaks above its current symmetrical triangle pattern, it could surge by 200 basis points to reach 6.4%.
Monthly chart of the U.S. 10-year Treasury yield. Source: TradingView
Rising yields reduce the opportunity cost of holding risky assets such as stocks and Bitcoin. If Bitcoin continues exhibiting risk-asset characteristics, a breach of the 10-year yield above 5% could trigger selling pressure across Bitcoin markets.
Historical Oil-Related Shock Episodes
Historically, short-term oil-related conflicts typically trigger sharp but brief volatility in Treasury yields and equities, whereas prolonged supply shocks may push yields higher for extended periods and exert sustained downward pressure on equity markets.
During the 1973 Yom Kippur War and the subsequent Arab oil embargo, Treasury yields initially rose modestly before surging significantly amid accelerating inflation. The S&P 500 index declined approximately 41%–48% during this “stagflation” phase.
Annual chart of U.S. 10-year Treasury yield and S&P 500 index. Source: TradingView
During the 1979 Iranian Revolution, bond markets reacted more strongly: the 10-year Treasury yield rose approximately 150–200 basis points over the following year, while equity market corrections were relatively mild.
During the 1990–1991 Gulf War, the 10-year Treasury yield increased by roughly 50–70 basis points, and the S&P 500 fell approximately 16%–20%, rebounding after the conflict was brought under control.
Following Russia’s 2022 invasion of Ukraine, Treasury yields rose while the S&P 500 dropped 5%–10% in the short term.
The current conflict between the U.S., Israel, and Iran appears to be in the early stage of these historical patterns. Should hostilities escalate further and oil prices remain elevated, Treasury yields could climb further, subjecting risk assets to renewed downward pressure.
Bitcoin remains highly correlated with the S&P 500. Therefore, unless tensions ease rapidly, Bitcoin’s price is likely to face heightened downside pressure.
How Low Could Bitcoin’s Price Go?
From a technical analysis perspective, if Bitcoin’s price breaks below its current bearish flag pattern, it could decline further to $50,000—or even lower—in the coming months.
Three-day BTC/USD price chart. Source: TradingView
This technical outlook broadly aligns with prediction-market trading data. Currently, traders estimate a 70% probability that Bitcoin will fall below $55,000 in 2026, and a 46% probability it will drop below $45,000.
Arthur Hayes, co-founder of BitMEX, stated that a protracted U.S.-Iran war could force the Federal Reserve to adopt looser monetary policy—a bullish factor for Bitcoin.
He noted: “The longer the conflict lasts, the greater the likelihood the Fed prints money to fund America’s war machine.” He added:
“When central banks start printing money, I’ll buy Bitcoin.”
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