CoinShares says U.S. debt fears could lift Bitcoin

What happened

CoinShares published an analysis on October 8 that said concerns about U.S. government borrowing could increasingly influence how investors value Bitcoin. The firm said digital asset fund inflows had slowed after attracting $11.1 billion since mid-July.

The report pointed to the 10-year U.S. Treasury yield rising above 5.3% and the 30-year yield reaching 5.7%, both at two-decade highs. Yields eased by Oct. 8, when the 10-year rate was 5.22% and the 30-year rate was 5.60%.

James Butterfill, head of research at CoinShares, wrote in the Oct. 8 update that borrowing costs driven by fiscal anxiety may encourage allocations to decentralized digital assets. He said the absence of flow momentum reflects uncertainty rather than deteriorating fundamentals.

Bitcoin traded at $82,958 on Oct. 9, after falling below $81,000 on Oct. 8. U.S. spot bitcoin ETFs recorded $487.07 million in net withdrawals on Oct. 7 and another $244.13 million in outflows on Thursday.

Why it matters

CoinShares says rising Treasury yields could matter more to Bitcoin's next move than the Fed's rate decisions. Higher bond yields typically make interest-paying alternatives more attractive and tighten financial conditions.

October rate hike odds dropped to 23% from 71% three weeks earlier, after September U.S. employment data fell short of expectations. Even so, the report says institutional buying has not recovered enough to confirm stronger demand for Bitcoin investment products.

U.S. spot bitcoin ETFs attracted $241.08 million in weekly inflows through Oct. 2, roughly 90% below the preceding week's $2.39 billion. CoinShares says the slowdown reflects uncertainty, not weaker fundamentals.

What the data shows

CoinShares puts cumulative digital asset inflows at $11.1 billion since mid-July, and it says that figure covers the whole period, not the latest reporting week.

Daily Treasury yield figures put the 10-year rate at 5.31% on Oct. 5 and the 30-year rate at 5.67% on Oct. 7.

The Treasury expanded long-end buybacks from Sept. 9 through Nov. 4, with maximum purchases rising from $2 billion to at least $4 billion per operation.

Background

Butterfill described September as the worst month for U.S. government bonds in four years. The 10-year rate increased more than 50 basis points as long-term yields reached two-decade highs.

Treasury Secretary Scott Bessent acknowledged limits to controlling the bond market and highlighted oil prices. In August, Grayscale described stronger correlation between Bitcoin and gold and weaker correlation with technology stocks.

In September, the 10-year yield had already climbed above 5.2% while Bitcoin struggled to hold gains despite continued investment through spot exchange-traded funds.

What is still unclear

• CoinShares did not identify a specific amount of withdrawals for the latest week in its October 8 analysis.
• The $11.1 billion figure represents cumulative inflows since mid-July, not the amount invested during the current reporting period.
• CoinShares believes concerns about U.S. government finances may have contributed to earlier allocations, although the latest fund flows have not established that explanation.
• Actual purchases under the expanded buybacks depend on the offers Treasury accepts.

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