Crumbling Markets Have Sent Treasury Yields Plunging, Offering Hope for Crypto

As if the bursting of a speculative bubble in memecoins wasn't enough to send crypto markets tumbling over the past weeks, a general risk off sentiment in traditional finance is adding to the pressure.

Perhaps in a bit of a speculative bubble themselves, the major U.S. stock market averages have been in quick retreat of late, triggered by a series of tariff threats from President Trump. Threats no more, 25% levies against goods from Mexico and Canada went into effect today, among additional taxes on Chinese goods.

Falling another 2.6% yesterday and down in early action Tuesday, the Nasdaq today now sits below the level it was at prior to Trump winning the election in November.

Bad news brings lower rates

"We're set on bringing interest rates down," Treasury Secretary Scott Bessent stated in an interview with Fox News Tuesday morning.

Indeed, the 10-year Treasury yield currently stands at 4.13% versus 4.80% just prior to the Trump inauguration six weeks ago.

At the short end of the curve, markets are dramatically repricing expectations for Fed rate cuts in 2025. The odds of at least one rate cut by the Fed's May meeting have risen to 47% versus just 26% one week ago, according to the CME FedWatch Tool. The chances of two or more rate cuts by the June meeting have jumped to 36% from 15% one week ago.

Crypto Daybook Americas alluded to potential rate cuts that could help lift depressed crypto prices, though the economy remains far from a return to quantitative easing.

While lower rates might seem like an easy fix, the challenge lies in balancing inflation, which currently stands at 3% year-over-year after four consecutive months of increases. The last time headline inflation was at or below the Fed’s 2% target was back in February 2021.

The Federal Reserve must navigate a delicate balance — easing rates to help keep the economy out of recession without pushing inflation even higher.

Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.