Why Buy Bitcoin When Treasuries Pay 5%? | $18B Options Expiry Explained | Daily Crypto Deep Dive

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Welcome back to the Daily Crypto Deep Dive. If you were offered two choices today, put your money into Bitcoin, where a 10% move can happen in a day, or lend money to the United States government and earn close to 5% a year, which one actually makes more sense? That question sits underneath a huge amount of what is happening in markets right now.

Treasury yields are hovering around levels we have barely had to think about through much of the modern crypto era. Bitcoin has still pushed back toward the mid-$80,000, and this Friday roughly $18 billion of Bitcoin and Ethereum options are due to expire. Today, we are going to connect those three things. What a treasury yield actually is, why it competes with crypto, what this massive options expiry means, and what analysts think could happen once Friday's positioning disappears. Welcome back to the Daily Crypto Deep Dive. Before we start, a quick word on Kraken. Kraken is the exchange we use and trust, and using our link is one of the simplest ways you can support the show and help us keep the podcast ad-free.

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As always, none of this is financial advice. Start with treasuries. A US. Treasury is basically an IOU from the American government. Investors lend the government money and, in return, receive interest and get the principal back at maturity. Very short-dated securities are treasury bills. Medium-term securities are notes, and longer-term ones are bonds. The number markets obsess over is the yield, which is essentially the return available at the price investors are currently paying. The slightly confusing part is that bond prices and yields move in opposite directions. If treasury prices fall, yields rise. If prices rise, yields fall. A simple way to picture it is a bond paying $50 a year. At a $1,000 price, that income equals 5%.

If the same bond falls to $900, the same $50 is a better return relative to the lower price. Real bond pricing is more complicated because the coupon, maturity value and time remaining all matter. But that explains the basic relationship. The latest official US Treasury curve available before recording, for Tuesday, September 22nd, put the 2-year yield at 4.71%, the 10-year at 4.96% and the 30-year at 5.29%.

That creates a genuine alternative to crypto. If you had $100,000 earning roughly 5%, you are talking about roughly $5,000 a year in yield before tax, fees and any price movement if you sell early. Bitcoin pays you nothing simply for holding it. It might rise 50%, but it can also fall 30%.

So the question for a pension fund, family office or cautious investor becomes very different. Why take enormous volatility when US government debt is offering a meaningful return? There are catches. A treasury is not identical to a guaranteed savings account. By a long-dated treasury and interest rates rise further and the market value of your bond can fall if you need to sell before maturity. For a British investor, there is also pound-dollar currency risk. You could make money on the treasury itself, but lose some of that return if the dollar falls against sterling before you convert the money back. But in global finance, treasuries are still used as the benchmark risk-free asset, and that benchmark affects everything. If the safe rate is 1%, a risky investment expected to return 7% looks attractive. If the safe rate is 5%, taking significantly more risk for 7% suddenly looks far less impressive. That is why higher treasury yields can hurt Bitcoin. First, there is opportunity cost. Investors can earn more without accepting crypto volatility. Second, borrowing and leverage become more expensive. Third, higher yields raise the hurdle rate across financial markets. Bitcoin does not have company earnings to discount like a stock, but it still competes for the same global pool of capital. When money becomes expensive and safe assets pay more, speculative assets have to work much harder to attract funds. But here is what makes the current setup interesting. Bitcoin has been rising anyway.

It recently pushed above $86,000 and reached an 8-month high despite the 10-year treasury yield sitting around 5%.

Market Watch described the move as part of a wider return of risk appetite, with technology and other risk-sensitive assets strengthening at the same time. That tells us the lazy rule of yields up equals Bitcoin down is not good enough. Markets are never that simple. Barclays' derivatives strategist Amrout Nashiqar told Reuters that the current treasury selloff appears to be driven less by fears that nobody wants US government debt and more by stronger economic expectations and a higher expected path for federal reserve interest rates. Truist fixed-income managing director Chip Huey made another important point. The speed of the move matters.