Selloff likely as demand falters and ‘real’ interest rates surge

Bitcoin BTC$67,446.83 has jumped 2% this week, but shaky demand-supply dynamics and rising “real” interest rates could limit the rally.

Last week, CoinDesk noted that inflows into spot ETFs have cooled, pointing to renewed institutional apathy. Further, stablecoin growth has stalled, signaling a lack of fresh fiat inflows.

The figures look alarming compared to the supply or the daily issuance of BTC from mining activity. On average, about 450 new BTC are mined each day under the current issuance schedule based on the protocol producing a new block roughly 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 measures institutional demand relative to miner issuance, has collapsed to just 1.3× from 5.3× in late February. This marks a significant deterioration in demand.

“The current reading of 1.3× places the market firmly within this [passive absorption/erosion] band. Here, demand still marginally exceeds miner issuance, but only just,” analysts at Bitfinex said in a report shared with CoinDesk.

This means that any meaningful rally would require strong, consistent inflows – the kind we saw in late 2024 and the first half of 2025.

Real yields surge

That said, the incentive to park money in an asset like Bitcoin, which lacks an inherent yield or cash flow, looks weak as market-determined real interest rates, or inflation-adjusted U.S. Treasury yields, continue to rise.

Yield on the 10-year inflation-protected securities (TIPS) has risen by more than 30 basis points to 2.02% since the U.S. and Israel first attacked Iran on Feb. 28. The yield hit a high of 2.12% last week, the highest since June 2025.

This yield represents the real return offered by bonds. As it rises, it tends to pull capital away from risk assets and zero-yielding assets alike. Bitcoin ticks both boxes – it’s a risk asset tied to an emerging technology and is often likened to gold by its proponents.

“Bitcoin’s situation is unlikely to improve without lower Fed rates and healthier liquidity, as rising real yields drive capital away from non-yielding assets,” Bitfinex analysts said.

Moreover, the market is pricing in elevated real yields for the near term, suggesting this anti-BTC environment could persist.

“In particular, the 10-year real yield is rising faster than the 5-year real yield, implying the market is pricing tighter financial conditions and higher real rates further out the curve,” Michael J. Kramer, founder and CEO of Mott Capital Management, said in a market note Monday.

He added that oil prices are in the driver’s seat and they are weighing on risk assets.

“It [oil rally] is tightening financial conditions across the broader market complex—a process that is likely to persist as long as oil continues to rise,” he added.