The 30-year US Treasury yield hit 5.18% on May 20, a level not seen since 2007, and Bitcoin fell back below $80,000 last week. The same macro forces that are pushing bond yields higher — a $2.06 trillion projected deficit and $88 billion monthly interest payments — are also draining appetite for risk assets like crypto. Meanwhile, tokenized US Treasuries just hit a record $15.35 billion in on-chain market value, up roughly 70% year-to-date, as investors chase yield rather than crypto volatility.
30-Year Yield Hits 5.18%
The long bond auction on May 13 was awarded at 5.046% — the first time investors got 5% on a 30-year Treasury since 2007. That auction was part of a borrowing calendar that sees the Treasury expecting $189 billion in Q2 and $671 billion in Q3. The US Office of Management and Budget projects a $2.06 trillion deficit for fiscal 2026, and interest payments from October through March ran nearly $530 billion, roughly equal to what the government spends on Defense and Education combined.
Through the first six months of fiscal 2026, interest costs are 6.1% higher than a year ago, making debt service the second-largest spending category after Social Security. The Congressional Budget Office projects annual interest costs rising from $1 trillion this year to $2.1 trillion by 2036.
Bitcoin Slips Below $80,000
Bitcoin retreated below $80,000 last week, and the pain wasn't limited to price. US spot Bitcoin ETFs saw about 14,000 BTC in weekly outflows, snapping a six-week inflow streak. The rotation out of crypto and into yield-paying assets looks increasingly plausible when the risk-free rate is above 5%.
Futures markets now assign more than a 44% chance of a Fed rate increase by December 2026 — a sharp reversal from earlier expectations of multiple cuts. Barclays pushed its forecast for the first cut back to March 2027. Higher rates for longer tends to suck liquidity out of speculative markets.
Spot Volumes Shrink on Binance and Coinbase
The liquidity drain shows up in exchange data. Spot net-volume on Binance dropped from about $50 million to $6.5 million. On Coinbase it fell from $30 million to $5.7 million. That's a roughly 80% decline on both platforms in a short span. When volume dries up that fast, spreads widen and large orders move prices more. It's not a great environment for traders or for the exchanges' fee revenue.
Tokenized Treasuries Surge 70% YTD
While crypto spot markets stagnate, tokenized US Treasuries are thriving. The on-chain market value hit a record $15.35 billion, up about 70% since the start of the year. These products — essentially tokenized versions of Treasury bills or bonds — let crypto investors earn a 5%+ yield without leaving the blockchain. It's a direct competitor to DeFi lending and staking, and it's winning.
The next concrete test comes in July, when the Treasury's Q3 borrowing estimate of $671 billion hits the market. And on the Fed side, every CPI and jobs print between now and December will be parsed for whether that 44% probability of a rate hike becomes reality.
