Conclusion in one sentence: The 10-year Treasury yield surged to 5.34%, hitting the highest level since 2002, with the third quarter showing the steepest quarterly rise in 32 years. This round of selling is driven by three forces - the repricing of policy credibility, supply pressure from interest bills, and the amplification effect of crowded positions. This article takes the rise in U.S. Treasury rates as a starting point and focuses on analyzing its transmission to stocks, financing markets, crypto assets, and related expression tools: in the third quarter, BTC and U.S. Treasury yields rose together, as capital inflows temporarily outweighed discount rate pressures; meanwhile, over the past year, the six expression tools that are "bullish on Bitcoin" have all converged returns back to BTC itself. This article is a compilation of public information and industry observations and does not constitute any investment advice.

On October 1, the 10-year Treasury yield broke through 5.34% during trading, surpassing the 2007 high, returning to the highest level since 2002; the 30-year yield reached its highest level since 2002 on the same day, closing on October 2 at 5.63%. Reuters' qualitative description is even harsher: this is the steepest quarterly rise in 32 years.

The market at closing appeared calm. The Dow closed at 50,926.56, up 0.04%; the S&P 500 rose 0.19%; the NASDAQ gained 0.04%. The indices rallied back from a near 1% drop during the trading session, with Accenture surging 16% on AI orders, and the optical communication sector collectively exploded.

The bond market set historical records, while the stock market shrugged at closing. This contrast itself is a signal: the market does not believe that rising yields equate to the apocalypse for risk assets, but it also does not consider it inconsequential. The real question is - who is selling, and what are they selling.

I. First, let's look at the numbers

From August 2025 to February 2026, the 10-year yield traded sideways around 4% for over six months, with a low of 3.96%. It began to rise in March, accelerating significantly in the third quarter: it was still at 4.54% in mid-July but closed at 5.262% during the week of September 28, an increase of approximately 72 basis points in one quarter. After the Federal Reserve raised rates on September 16, yields did not retreat, and in the last week of September, they rose by about 26 basis points again, reaching 5.342% during intraday trading on October 1. On October 2, the yield in Asia slightly retreated to around 5.26%, with Reuters describing it as "some buyers returning after the bond drop."

The 30-year yield fluctuated even more. According to BTIG, in just seven trading days, the 30-year yield rose from 5.25% to 5.69%, a cumulative increase of 44 basis points; during the same period, the daily sentiment index (DSI) for bonds fell to 10%, indicating extreme pessimism. On October 2, the 30-year closed at 5.623%.

The shape of the curve contains more information. In the third quarter, the 10-year yield rose by about 78 basis points, and the 30-year rate approximately 64 basis points, while the 30Y-10Y spread actually narrowed from 50 basis points to 36.4 basis points, dipping as low as 32.5 basis points on September 21. This is not a steepening driven by "panic at the long end" alone; rather, it is more akin to a synchronized lift across the entire long end - the focus of the market's repricing may no longer be "how many more rate hikes the Fed will make," but "how much compensation is needed for holding long-term dollar debt."

This is not a phenomenon unique to the United States. On October 1, on the same day: UK 30-year government bond yields hit 6%, the first time since March 1998; French government bond yields reached an 18-year high, and the France-Germany 10-year yield spread widened to 146.68 basis points, the widest since 2012; Japan's 10-year yield rose to 3.11%. The Bloomberg Global Aggregate Bond Total Return Index's yield reached the highest since 2000, with global bonds posting an approximate 2.7% loss this year.

Developed market sovereign bonds were collectively repriced in the same quarter, ruling out a singular explanation like "a policy misstep of a certain country." The question now becomes: what is raising the term compensation for all dollar, pound, euro, and yen assets simultaneously within the same time window?

II. Who is selling: three explanations with evidence presented

There are many explanations in the market for this wave of selling, but they differ significantly in the traceability of the evidence. By breaking them down, it’s much more useful than mixing everything together and shouting "bear market in bonds".

Explanation 1: Policy credibility is being discounted. After the Fed's rate hike on September 16, bond traders continued pricing in the possibility of further hikes; the consensus among some asset management institutions is that a weakening labor market may not change this expectation. T. Rowe Price's head of investment-grade bonds noted that job growth needs to approach zero or even negative growth, with wages significantly below expectations, "the threshold is actually very high." TS Lombard's chief economist, Steven Blitz, proposed a more extreme scenario: if the Fed were to repeat its "original sin" by changing course too early before inflation subsides, the 10-year yield could reach 8% in the coming years. An 8% scenario belongs to the tail risk, but the mechanism is worth noting: if the central bank eases before inflation is under control, the market may seek compensation in yields rather than comments.

Explanation 2: Supply and interest bills. The interest expenditure on U.S. government debt has already exceeded $1 trillion for this fiscal year. Higher yields make refinancing more expensive; as refinancing becomes pricier, new issuance increases; more issuance, in turn, raises the required compensation for the next pricing round. This cycle can self-reinforce without relying on external events. The global synchronicity provides corroboration for this explanation: the UK, France, and Japan are facing similar fiscal realities, with the extent of yield increases roughly matching the fragility of each country's fiscal space. Four sovereign issuers are required to provide higher compensation in the same quarter, making a singular central bank factor insufficient to explain the phenomenon.

The above chart provides the most direct quantitative evidence for Explanation 2: During the third quarter, the U.S. 10-year yield rose approximately 77 basis points, the 30-year yield about 64 basis points, the German 10-year yield about 59 basis points, the UK 30-year yield about 42 basis points, and the Japanese 10-year yield about 33 basis points — while there are variations in magnitude, the direction is completely consistent.

Explanation 3: Crowded positions amplify volatility. As of October 2, short positions betting on continued rises in yield have surged, pushing up repurchase financing costs. This mechanism possesses self-reinforcing characteristics: the more shorts there are, the more expensive financing becomes; as financing costs rise, the need for covering and stop-losses increases; the more stop-losses triggered, the easier it is for yields to overshoot. BTIG's Jonathan Krinsky estimates that yields may be nearing the limits of tactical upward movement, with the potential for a rapid pullback in the short term. The extreme DSI reading dropping to 10% signals the accumulation of conditions for a reversal. It is important to distinguish: short positions, repo costs, and DSI are all traceable data, while "crowding leads to overshooting, and overshooting fosters reversal" is a mechanism inference.

The three explanations are not mutually exclusive. Based on existing public data, Explanation 2 receives relatively more support; Explanation 3 reflects more on short-term volatility mechanisms; Explanation 1 could be considered as one of the tail scenarios, still needing verification from job data, auction results, and repo spreads. Market divergences similarly persist: those expecting an 8% yield tend to view Explanation 1 as a trend; seasoned bond market participants who are bullish on U.S. bonds for the first time in six years tend to believe that Explanations 2 and 3 will self-correct. The coexistence of differing positions at the same price level indicates a high degree of concentration of bullish and bearish divergences near the current position. The choice of which explanation to believe determines which type of data to focus on next.

III. Transmission pathways: from discount rates to crypto

The transmission of rising yields to different assets does not occur through the same pipeline.

Stocks: Earnings expectations stage partially offset discount rate pressure. The trading session on October 1 provided a sample: yields peaked at 5.342%, and the index briefly fell nearly 1%, then Accenture announced new signed orders of $84.5 billion for the year and $22.2 billion for the quarter, with the stock price rising 16%, and major indices narrowing their declines to near break-even. While discount rate pressure is objectively present, when earnings expectations are strong enough, the numerator can partially offset the denominator temporarily. However, BTIG’s contrasting view holds that the changing correlation between yields and the NASDAQ is bidirectional; if yields rapidly fall, previously concentrated holding structures may face adjustments, potentially weakening sectors with concentrated weights while the market breadth heals. Index volatility is limited, while the internal structure may be changing.

Financing markets: Rising repo costs. An increase in short positions drives up repo costs, implying that the financing costs for leveraged funds are on the rise. The repo market lies at the base of the dollar leverage system: hedging funds borrow bonds to buy debt, market makers replenish inventory, and corporate short-term financing rollovers all depend on this pipeline. This pipeline is equally relevant to the crypto market — perpetual contracts' funding rates, exchange leverage, and stablecoin inflows and outflows are downstream under the same financing conditions. The tension appearing first on the repo side later exerts pressure on the risk asset side.

Hong Kong stocks: The Hong Kong dollar is pegged to the U.S. dollar, transmitting financing costs. The peg of the Hong Kong dollar to the U.S. dollar means that rising U.S. dollar rates will convey to Hong Kong stock valuations, directly affecting growth sectors with longer durations. The Hang Seng Tech Index saw a slight rebound after the rate hike on September 16 but subsequently retreated, closing at 4,157.94 on October 2, down 2.26% from the previous day. Southbound capital acts as a buffer variable in this chain: its rhythm more closely follows the mainland liquidity cycle than U.S. dollar pricing, and whether southbound inflows can offset foreign capital outflow pressure may be a crucial factor influencing the strength of this transmission chain.

Looking at daily charts, the Hang Seng Tech Index surged briefly after the Fed raised rates on September 16, then began to decline around October; it reported 4,144.02 during Asian hours on October 2, down 2.58% (intraday numbers, not closing). The buffer variable for Hong Kong stocks is the rhythm of southbound capital — it belongs to the mainland liquidity cycle and does not fully follow dollar pricing. The strength of this transmission chain depends on whether southbound capital can counteract the pressure from the foreign capital's discount rate.

To crypto: Three channels, directions do not align.

The discount rate channel is negative. Rising real interest rates exert pressure on long-duration assets generally, and BTC increasingly resembles a "no cash flow long-duration asset" pricing way structurally. The first half of 2026 demonstrated this: during the period when yields traded sideways around 4%, BTC fell from $117,000 to $63,000, primarily due to capital outflows and deleveraging — its impact may outweigh that of the discount rate channel itself. This suggests that, for crypto assets, the first sensitive variable may not be the interest rate level, but the direction of marginal funds.

The yield channel is positive, though less discussed. As U.S. Treasury yields rise, stablecoin issuers whose main reserve asset is short-term U.S. Treasuries accumulate thicker reserve yields. Industry studies have provided oversized references: Circle generated $668 million in reserve income in the second quarter of this year, accounting for about 95% of revenue, with their business model resembling a conversion of on-chain liabilities to on-chain U.S. Treasury portfolios. With every step up in interest rates, the interest spread for such “on-chain money market funds” thickens by a margin. The cost is borne by holders: once the risk-free interest rate surpasses 5.3%, the opportunity cost of holding volatile assets synchronously rises. The increase in issuer profits coincides with rising opportunity costs for holders — this is the dual effect of rising rates on crypto assets.

The liquidity channel is tightening. Rising repo costs, disturbances in financing markets, along with global portfolio rebalancing driven by increasing bond yields, marginally withdraw risk appetite. The force to hedge this channel comes from ETFs: reports from the end of September indicate that Bitcoin ETFs saw net inflows of $2.4 billion in a single week, occurring during the week the U.S.-China counterpart tax reduction framework was announced. In the third quarter, an intuitive scene emerged: yields rose by 72 basis points, and BTC rose by approximately 33%. Weekly data shows BTC surged from about $63,600 at the end of June to $84,700 during the week of September 28, with a single-week spike of 23.7% during the week of August 10. This runs counter to the intuition of "rising yields being bad for crypto."

Examining the weekly rise and fall throughout the past year: during the third quarter, rising yields and BTC’s rise almost always occurred simultaneously; however, when viewing the entire year, their relationship fluctuated between positive and negative, indicating no stability. This suggests that their simultaneous rise was a unique phenomenon in the third quarter rather than a trend that can be relied upon. If the two consistently moved in opposition, "rising yields being bad for BTC" would approach common sense; if they consistently rose together, BTC would entirely become a type of risk asset. Currently, neither is true — one possibility is that the dominant factor driving BTC in the third quarter has shifted, relegating interest rates to a relatively minor position.

On a daily basis, BTC did not decline following the rate hike on September 16, accelerated upward in late September, and closed at $84,469 on October 1. There are three explanations in the market for this simultaneous rise. The first is inflationary: the rise in nominal interest rates has been partially absorbed by inflation expectations — at one point, the situation in the Middle East pushed WTI above $100, which then retreated — nominal assets typically receive more attention in inflationary environments. The second is growth-driven: AI capital expenditures enhance profit expectations and risk appetite, with yields and risk assets rising together, as shown by U.S. stocks’ performance on October 1. The third is fund-driven: continuous net inflows into ETFs, combined with the implementation of the U.S.-China counterpart tax reduction framework, led capital flows to temporarily outweigh the discount rates.

Determining which of these three explanations is true based solely on current data is difficult, but there are differences in robustness: the first two are based on changes in fundamentals, while the third is based on capital flows, and the latter can shift more rapidly. A measurable cross-signal is: if yields continue to rise while ETF inflows significantly slow, it may indicate a retreat from the scenario described by the third explanation — at that point, the impact of the discount rate channel may be amplified again.

IV. $113,000: Preconditions for Citigroup's target price

On October 1, Citigroup raised its 12-month price target for Bitcoin from $82,000 to $113,000, and for Ethereum from $2,240 to $3,028, while expecting net inflows of about $5 billion into crypto investment products over the next 12 months. On the day the report was released, BTC spot was reported at $83,251 (on Citigroup's basis), about 35.7% away from the new target. On the same day, the 10-year Treasury yield set a new high since 2002 — the research report and market provided opposing tones.

To place both in the same framework, it is essential to distinguish time dimensions. The $5 billion net inflow is a flow issue over 12 months, while 5.34% is a price issue for that week; both can be true simultaneously. This target implies three prerequisites: continuous ETF net inflows (which are currently being realized and accelerated, with a single-week inflow of $2.4 billion occurring just days before the report was released); controllable dollar and real interest rates, avoiding discount rate shocks (which are currently being tested — traders are still pricing in more hikes following the rate increase, and the 30-year hit a 24-year high); and steadiness in regulation and risk sentiment (neutral).

For this target price, what matters more is not the number itself, but the conditions under which it holds. In the coming weeks, two aspects should be monitored closely: whether real interest rates hit new highs again; whether weekly ETF inflows merely remain at the billion-dollar level. If both conditions are maintained, this pathway remains valid; if either shows clear weakness, the reference value of this target price may decline, and market pricing may revert to a range of fluctuations.

V. Performance of six types of Bitcoin-related tools over the past year

The same judgement — bullish on Bitcoin — can be expressed using six structurally different tools. This section compares the past year's performance of these six tools: how different the results are by choice of tool. Which type to choose depends on the respective position structure and drawdown tolerance, which is not a question that this article can or should answer. All numbers come from public market data and financial reports, with prices reflecting October 1 closing values for U.S. stocks (October 2 pre-market figures not included), and changes measured by weekly closing data (from the week of September 28, 2025, to the week of September 28, 2026).

Spot and spot ETF: Directly track asset prices. Over the past year, BTC has fallen 24.5%, and IBIT has dropped 22.6%, with a difference of 1.9 percentage points, primarily due to fees and tracking errors. On October 1, IBIT closed at $47.75, with a market cap of about $80 billion. These tools have no operational variables mixed in: if the macro judgment is correct, it benefits directly; if the judgment fails, it suffers losses, and it won't be rewritten by company decisions nor buffered by other businesses.

Operational platforms: A combination of cash flow and trading volume. Robinhood (HOOD) closed at $111.15 on October 1, down 8.7% over the past year and 3.5% in 2026, making it the least declined in its operating platform group. The market's tolerance relates to its revenue structure: fiscal year 2025 saw revenue of $4.47 billion (up 52%) and a net profit of $1.88 billion, with crypto being only one of its business lines. Volatility across quarters remains significant — with Q1 of 2026 at $1.067 billion in revenue and Q2 fall to $535 million — this is typical of trading business, not indicative of operational deterioration.

Coinbase (COIN) closed at $189.29 on October 1, down 39.4% over the past year and 20.0% in 2026, being a higher dependency version on crypto trading volume with a deeper decline. Fiscal year 2025 reported revenue of $7.18 billion (up 9.4%), with growth significantly slowing; in Q1 and Q2 of 2026, it recorded net losses of $394 million and $359 million, while it still earned $1.26 billion profit throughout fiscal year 2025. During the period when BTC decreased from $117,000 to $85,000, trading volumes and fair value of holdings were both under pressure, and the income statement changed faster than stock prices. To what extent this decline is an overreaction needs further verification with subsequent transaction volume data in earnings reports, as looking at stock prices alone makes it difficult to discern.

In the first half of 2026, both HOOD’s revenue and net profit were positive; COIN had the largest revenue scale but recorded losses; CRCL's net profit totaled around $104 million across two quarters.

In the first half of 2026, both HOOD’s revenue and net profit were positive; COIN had the largest revenue scale but recorded losses; CRCL's net profit totaled around $104 million across two quarters.

Stablecoin issuers: Indirect beneficiaries of rising rates. Circle (CRCL) closed at $82.91 on October 1, down 34.7% over the past year and 0.7% in 2026. Fiscal year 2025 generated revenue of $2.75 billion (up 64%), with a net loss of $70 million for the entire year; however, in the first half of 2026, net profits turned positive (of $55.25 million and $48.22 million), with a net profit margin of about 7%. The logic is straightforward: reserve income accounts for about 95% of revenue; for every step up in interest rates, this business's interest spread increases. Yet, the stock price fell 34.7% in the past year — market concerns, however, involve two other issues: valuation levels and distribution costs, with the tailwinds from interest rates insufficient to cover completely. Circle simultaneously faces two opposing forces: the higher the interest rates, the thicker the reserve income; the higher the interest rates, the higher the opportunity cost for holders of stablecoins. The relative strength of both may be a crucial factor impacting the future direction of their stablecoin business model.

Leveraged proxies and mining stocks: Highly elastic tools. MicroStrategy (MSTR) closed at $160.50 on October 1, down 48.1% over the past year and up 2.1% in 2026. Its decline exceeded that of BTC itself in the past year, and fluctuations were similarly amplified during the rebound phase. The characteristics of leveraged tools lie in this: both directions may exhibit substantial volatility.

Mining stocks provide a different observation angle. MARA closed at $11.21 on October 1, down 30.5% over the past year, with a +13.1% rise in 2026; CLSK closed at $12.52, down 3.4% over the past year, with an +8.4% rise in 2026. Both outperformed BTC in 2026, but their performances over the past year have significantly diverged: CLSK's decline was much less than MARA's. Mining stock pricing also includes factors such as hash rate expansion, power costs, and unit economics post-halving, and does not maintain a stable correlation with coin prices — viewing them as "parity alternatives" to BTC has not been supported by data over the past year.

The return disparity among the six types of tools has significantly narrowed: over the past year, BTC fell 24.5%, with all five other tools converging toward it—with tools with higher leveraged attributes experiencing greater declines (MSTR -48.1%), while those with more diverse sources of income saw relatively milder declines (HOOD -8.7%, CLSK -3.4%). None of the categories experienced an independent market. The differences among the tools essentially reflect differences in risk characteristics: historically, in similar environments, tools with higher elasticities often exhibit larger increases; whereas in phases dominated by discount rate pressures, their retracements are usually deeper. The differences carry no intrinsic superiority or inferiority, but holders need to understand which type of risk characteristics they are exposed to.

VI. Observation Checklist

In the coming weeks, several signals will be more important than yield levels.

VII. Final Thoughts

The explosive rise in yields can easily be read into two extreme narratives: either "bad news has been fully priced in," or "the end of the bond market." The answer given by this round of market activity is a third option - the pricing weight is shifting from monetary policy to fiscal realities; this process has no final bell but involves batches of cash flows being repriced again and again.

History has provided similar moments. The last time the 10-year yield stood near the 5% level, the market similarly endured debates of "supply narrative vs. demand collapse," culminating in a temporary retreat of yields; behind the 2007 high of 5.3% lay a completely different credit cycle. The same level but different structures mean conclusions cannot be directly replicated — this round's uniqueness lies in the scale of fiscal bills and global synchrony, determining that the room for retreat may be narrower than past experiences suggest.

For crypto investors, specific signals are more useful than macro stances. The tug-of-war between capital flows and discount rates continues, with the simultaneous rise in Q3 indicating capital flows are temporarily dominant, highlighting the fragility of this tug-of-war is accumulating. Future monitoring can prioritize indicators such as the 10-year yield, financing costs, results from 30-year auctions, and repo spreads to assess how the relative impacts between capital flows and discount rates evolve.

Zooming out further, a world where risk-free interest rates stand above 5% has implications for the crypto industry that extend beyond prices. On-chain operational activities must now compete with this new yield benchmark: staking yields, stablecoin interest spreads, and RWA product pricing must all address the same question — after deducting risk-free returns, how much compensation remains? The valuation habits fostered in a zero-rate environment in 2021 are being audited item by item now. At the issuer level, enriched reserve incomes are a tailwind; at the application level, user retention must surpass a 5.3% threshold. The industry’s past two years of debate over "what is the fundamental" will be forced to yield more concrete answers in this interest rate environment.

As for who ultimately foots this bill, the auction charts and repo spreads in October will yield answers before any commentary. The one thing that can be determined now is that the handover of pricing power has not yet been completed.

Data Sources

Disclaimer: The content of this article is for general information and market commentary only, compiled from publicly available information up to the time stated in the text; relevant market data, expectations, and probabilities may change with market conditions. The views and investment strategies of third parties or other individuals cited in the text only represent the views of the relevant third party at a specific time and do not represent BIT's views or recommendations. This article does not constitute investment advice, investment research, an offer, solicitation, or recommendation for any security, investment product, or trading strategy, nor should it be used as the basis for any investment decision. Financial markets carry risks, and the prices of securities and market performance may fluctuate. Past performance and market trends do not indicate or guarantee future results. Investors should independently assess the associated risks based on their situations and seek professional advice when necessary.

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