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The US government is now paying more to borrow money than at any point since the pre-financial-crisis era, and the consequences are cascading through every asset class, crypto included.
Thirty-year Treasury yields have blown past 5.18%, a threshold not crossed since 2007. The 10-year note climbed to roughly 4.6-4.7%, its highest level in over a year.
What’s driving the sell-off
The catalyst cocktail is potent: the ongoing war in Iran has sent oil prices soaring, US producer prices jumped 6.5% year-over-year in May 2026, the highest rate since late 2022, and the federal government is sitting on approximately $39 trillion in total debt. Annual interest payments alone are now approaching $1 trillion.
Bank of America analysts called US fiscal policy the “elephant in the room.” Higher yields mean the government pays more to service its existing debt, which increases the deficit, which means more borrowing, which means more bonds on the market, which pushes yields even higher.
This isn’t just an American phenomenon. The average 10-year borrowing rate across G7 nations has risen to around 4%, up from approximately 3.2% before the Iran conflict escalated. Japan’s government bonds are feeling similar pressure.
The crypto connection
Bitcoin experienced over $1 billion in ETF outflows in a single week during May. No token-specific catalyst drove the selling. This was purely a macro trade, with investors rotating out of risk and into safety.
While Bitcoin struggled under the weight of rising real yields, tokenized US Treasuries surpassed $15 billion in on-chain value by May 2026, roughly triple the $5 billion recorded just 14 months earlier.
What this means for investors
Mortgage rates are directly tethered to the 10-year Treasury yield. When that yield sits near 4.7%, 30-year fixed mortgage rates climb correspondingly, making homeownership more expensive and cooling housing demand.
The growth of tokenized Treasuries to over $15 billion signals where institutional attention is migrating. Rather than betting on Bitcoin’s price trajectory in a risk-off environment, large allocators are using blockchain rails to access yield-bearing instruments.
With annual interest expenses approaching $1 trillion on $39 trillion in total debt, even modest further increases in borrowing costs compound the deficit problem significantly.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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