Demand for Bitcoin declines as ‘actual’ interest rates rise.

Increasing U.S. real yields, particularly on 10-year TIPS, present a challenge for zero-yielding risk assets such as bitcoin.

BTC demand declines as real yields create resistance. (Christian Mack/Unsplash)

Key points:

• Bitcoin demand in relation to supply has decreased to 1.3 from over 5.
• Increasing U.S. real yields, particularly on 10-year TIPS, create a challenge for zero-yielding risk assets such as bitcoin.
• Markets anticipate that these tighter financial conditions will continue.

Bitcoin BTC$67,431.72 has increased by 2% this week; however, unstable demand-supply dynamics and escalating “real” interest rates may restrict the rally.

Recently, CoinDesk highlighted that investments into spot ETFs have slowed, indicating a resurgence of institutional disinterest. Additionally, the growth of stablecoins has stagnated, reflecting a lack of new fiat inflows.

The statistics are concerning when viewed against the supply or the daily generation of BTC from mining operations. Typically, around 450 new BTC are mined daily based on the current issuance schedule, which produces a new block approximately every 10 minutes, with a reward of 3.125 BTC per block since the April 2024 halving.

Bitfinex’s absorption-to-emissions ratio (AER), which gauges institutional demand relative to miner issuance, has plummeted to just 1.3× from 5.3× in late February. This indicates a notable decline in demand.

“The latest figure of 1.3× places the market firmly within this [passive absorption/erosion] range. Here, demand slightly surpasses miner issuance, but only just,” analysts at Bitfinex stated in a report shared with CoinDesk.

This suggests that any significant rally would necessitate robust, consistent inflows—similar to those witnessed in late 2024 and the first half of 2025.

Surge in real yields

Nonetheless, the incentive to invest in an asset like Bitcoin, which does not provide an inherent yield or cash flow, appears weak as market-driven real interest rates, or inflation-adjusted U.S. Treasury yields, continue to climb.

The yield on the 10-year inflation-protected securities (TIPS) has risen by over 30 basis points to 2.02% since the U.S. and Israel first launched attacks on Iran on February 28. The yield reached a peak of 2.12% last week, the highest level observed since June 2025.

This yield signifies the real return offered by bonds. As it increases, it generally diverts capital away from risk assets and zero-yielding assets alike. Bitcoin qualifies as both—a risk asset linked to an emerging technology and is frequently compared to gold by its supporters.

“Bitcoin’s prospects are unlikely to improve without reduced Fed rates and better liquidity, as rising real yields divert capital from non-yielding assets,” analysts at Bitfinex remarked.

Furthermore, the market is anticipating high real yields in the near future, indicating that this unfavorable environment for BTC may continue.

“Specifically, the 10-year real yield is increasing at a faster rate than the 5-year real yield, suggesting that the market is factoring in tighter financial conditions and higher real rates further along the curve,” Michael J. Kramer, founder and CEO of Mott Capital Management, noted in a market update on Monday.

He also mentioned that oil prices are influential and are impacting risk assets.

“The [oil rally] is tightening financial conditions across the wider market spectrum—a trend that is likely to continue as long as oil prices keep rising,” he added.