Bitcoin and Gold vs. US Treasuries Offering ~5% Annual Yield

U.S. Treasury bonds offering an annual yield of approximately 5% may prove to be a more appealing investment option compared to Bitcoin and gold, according to Bloomberg Intelligence.

On October 18 (local time), Bloomberg Intelligence's chief macro strategist Mike McGlone identified U.S. Treasuries as the key beneficiary of capital flows in the current macroeconomic environment. McGlone characterized the present situation as the final phase for risk assets, noting that with the U.S. government providing a fixed 5% annual yield on dollar-denominated debt, the incentive to hold Bitcoin and gold has significantly diminished.

The comments follow the Federal Reserve's decision to raise interest rates by 25 basis points to a range of 3.75%-4% by September 16, 2026, as well as the U.S. 10-year Treasury yield approaching the psychological threshold of 5%, amid global market pressures from rising energy prices.

McGlone noted that gold, which offers no coupon payments, struggles to compete with the real yield of government bonds. Bitcoin, meanwhile, is being traded more like a high-risk asset than a store of value in an environment of limited liquidity. He suggested that large investors seeking capital preservation amid falling stock markets may be realizing profits from cryptocurrency and shifting toward safer assets.

Bloomberg Intelligence also observed that the ratio of Bloomberg Commodity Spot Index to long-term debt has reached extreme levels not seen since 1990, a pattern historically preceding severe recessions and declining interest rates. However, McGlone noted this cycle differs as the Federal Reserve is not easing monetary policy but continuing to tighten financial conditions, potentially increasing risks of shocks to global economy and stock markets. He anticipates significant capital movement toward U.S. Treasuries in the final phase of the monetary tightening cycle.