Investors are demanding higher returns to hold long-term US bonds, signaling growing unease about America’s rising debt levels. Meanwhile, Bitcoin just hit a record high of over $111,000, buoyed by rising institutional interest and support from the Trump administration. These two stories highlight a major shift in investor sentiment — away from traditional assets and toward digital ones.
US Bond Investors Ask for Most in a Decade to Buy Long Debt
Bond investors are demanding more and more compensation to hold long-dated US debt as global markets grow anxious about the widening fiscal deficit in the world’s biggest economy.
The US 10-year term premium — or the extra return investors demand to own longer-term debt instead of a series of shorter ones — has climbed to near 1%, a level last seen in 2014. It’s a measure of how jittery investors are about plans to raise the scale of future borrowing.
The US’s funding challenges came into focus after Moody’s Ratings stripped the nation of its last top-tier credit score a week ago. That downgrade was followed by the US House of Representatives passing a multi-trillion dollar bill that extends President Donald Trump’s tax cuts, and weak demand for an auction of 20-year Treasuries.
“The danger for now is that this fiscal phenomenon feeds on itself,” said Ella Hoxha, head of fixed income at Newton Investment Management, in an interview with Bloomberg TV. “That should be somewhat of a concern, certainly for risky assets and certainly for policymakers as well, as they have to finance at much higher interest rates.”
US long-term borrowing costs surged this week, with the 30-year yield climbing to 5.15% — just shy of its highest level in nearly 20 years. The real rate for the same tenor — which is adjusted for inflation — closed at the most elevated level since 2008 on Wednesday.
The moves eased on Friday as the selloff attracted buyers, with Bank of America Corp.’s Michael Hartnett saying investors should take the opportunity to add long-dated Treasuries as the US government is likely to heed warnings from bond vigilantes to bring its debt under control. The 30-year yield traded just above 5% as of 11 a.m. in London, up for a fourth week.
Long-term bond yields have also risen elsewhere this week, with those in Japan climbing to the highest since records began in the late 1990s. Similar debt in the UK, Germany and Australia has also faced selling pressure.
It’s a reminder from markets that governments can’t keep borrowing at the pace they did when interest rates were close to zero, particularly since trade tensions and sticky inflation have diminished the probability that policymakers will dramatically ease monetary policy.
“This speaks to the ongoing degree of nervousness around the fiscal backdrop in the US, but also on a global level, where deficit concerns continue to play on the minds of market participants everywhere,” said Michael Brown, a strategist at Pepperstone. “Justifiably so, frankly, given that there seems little-to-no desire among governments to get a grip of the situation.”
Investors around the globe have been moving away from US assets since Trump unveiled high tariffs on trading partners. While some of those have since been scaled back, fund managers say there’s too much policy uncertainty.
Money managers from DoubleLine to PGIM have flagged the risk that long-term yields will keep rising, and even central banks have expressed their worries. On Friday, the governor of the Philippine central bank said the authority may consider reducing its holdings of US debt following the Moody’s downgrade.
Bitcoin Rally Takes Largest Token Past $111,000 for First Time
Bitcoin surpassed $111,000 for the first time, with traders increasingly bullish on the prospects of the original cryptocurrency amid mounting institutional demand and support from Donald Trump’s administration.
Bitcoin climbed as much as 3.3% on Thursday to hit a record of $111,878, and traded just below $111,000 at 6:15 a.m. in New York. Smaller tokens also rose in a broad rally, with second-ranked Ether at one point up about 7.3%.
A wave of optimism is buoying Bitcoin after the advancement of a key stablecoin bill in the US senate fueled hopes of greater regulatory clarity for digital-asset firms under President Trump, who is avowedly pro-crypto. Surging demand from Michael Saylor’s Strategy — which has stockpiled over $50 billion worth of Bitcoin — and a growing list of token hoarders is another driving force behind the rally.
“It has been a slow motion grind into new all-time highs,” said Joshua Lim, global co-head of markets at FalconX Ltd. Buying by entities like special purpose acquisition companies, or SPACs, is helping drive prices higher, Lim said.
An affiliate of Cantor Fitzgerald LP is working with stablecoin issuer Tether Holdings SA and SoftBank Group to launch Twenty One Capital Inc., a company that emulates Strategy’s business model. A subsidiary of Strive Enterprises Inc. co-founded by Vivek Ramaswamyis merging with Nasdaq-listed Asset Entities Inc. to form a Bitcoin treasury company.
“Unlike previous cycles, this rally is not momentum-driven alone,” said Julia Zhou, COO of crypto market maker Caladan. “It is quantitatively underpinned by measurable, persistent demand and supply dislocations.”
Bitcoin’s outperformance relative to smaller cryptocurrencies is widening. An index that tracks so-called altcoins is down about 40% year-to-date, while Bitcoin is up 18% so far in 2025.
A group of 12 US Bitcoin exchange-traded funds have drawn strong inflows, with investors pouring in about $4.2 billion so far in May. In options markets, traders built eye-catching Bitcoin positions earlier this week with the $110,000, $120,000 and $300,000 calls expiring on June 27 logging the most open interest — or number of outstanding contracts — on Deribit, the derivatives exchange.
Tony Sycamore, market analyst at IG, said in a note that the fresh record shows that Bitcoin’s steep decline from a previous high set on Jan. 20 to below $75,000 in April was “a correction within a bull market.”
“A sustained break above $110,000 is needed to trigger the next leg higher towards $125,000,” he added.
Bitcoin’s latest milestone comes as Trump prepares to meet with the biggest holders of his memecoin at a dinner at his golf club just outside Washington on Thursday. The event has raised concerns among ethics experts, who argue that it offers access through transactions that directly benefit the president, and has sparked criticism over potential conflicts of interest.
Such events “highlight crypto’s increasing cultural visibility, though they have not had a measurable impact on market dynamics at this stage,” said Yuan Rong Tan, a trader at QCP Capital.
Conclusion
As the US grapples with ballooning deficits and investors grow cautious of long-term government debt, Bitcoin’s rise shows where some are placing their bets. The contrast between jittery bond markets and bullish crypto trends suggests that uncertainty and policy shifts are reshaping how investors allocate capital. Whether it’s a passing phase or the start of a longer-term trend remains to be seen — but smart investors are watching both closely.
Source: Bloomberg
