What Happens to Bitcoin If US Bond Yields Soar Above 5%?

Bitcoin (BTC) has been among the best-performing assets amid the US–Iran war, but signs of upside exhaustion are emerging due to an “out-of-control” bond market.

Key takeaways:

• US benchmark yields may rise by 200 basis points if the US–Iran war drags on further.

• Past oil-linked conflicts boosted inflation and reduced risk appetite, hinting BTC price may decline below $50,000 in 2026.

Oil shock may send US yields soaring over 5%

Since Feb. 28, when the US and Israel attacked Iran, the benchmark 10-year Treasury yield has climbed to about 4.42%, its highest in nine months.

The 30-year yield rose to roughly 4.97%, while the 2-year yield pushed up toward 3.95%–3.98%.

Treasury yields have climbed as the war-driven oil spike fuels fears of higher inflation, which, in turn, increases odds of zero rate cuts in 2026.

President Donald Trump’s five-day pause has eased immediate fears of strikes on Iran’s energy sites. But the war remains far from contained since Iran has denied any negotiations and cross-border attacks were ongoing as of Tuesday.

That is prompting fears of further rises in US bond yields among market watchers, with technical chartists further anticipating the 10-year yield to reach 6.4%, a 200 basis point jump, if it breaks out from its symmetrical triangle pattern.

Higher yields reduce the opportunity cost of holding risk assets like stocks and Bitcoin. A US 10-year yield jump above 5% may trigger sell-offs in the BTC market if it continues to behave like a risk asset.

Oil shocks in the past

In the past, short oil-linked conflicts triggered sharp but brief moves in yields and stocks, while prolonged supply shocks pushed yields higher and kept pressure on equities.

During the 1973 Yom Kippur War and Arab oil embargo, yields rose modestly at first before climbing as inflation took hold, while the S&P 500 fell about 41%–48% during “stagflation.”

The 1979 Iranian Revolution saw a stronger bond-market reaction, with the 10-year yield rising roughly 150–200 basis points over the following year, while stocks saw a milder drawdown.

In the 1990–91 Gulf War, the 10-year yield rose about 50–70 basis points and the S&P 500 fell roughly 16%–20% before rebounding once the conflict was contained.

The 2022 Russia–Ukraine war also coincided with higher yields and an initial 5%–10% drop in the S&P 500.

Related: What happens to Bitcoin if oil price hits $180 per barrel?

The current US and Israel–Iran war appears to fit the early stage of that pattern. If the conflict drags on and oil stays high, yields could rise further and risk assets could face another leg lower.

For Bitcoin, which remains tightly correlated to S&P 500, that would likely mean deeper downside pressure unless the war de-escalates quickly.

How low can the Bitcoin price go?

From a technical perspective, Bitcoin price may drop to $50,000 or lower in the coming months if it breaks out of its prevailing bear flag pattern.

These projections broadly align with prediction market bets, where traders currently set a 70% probability that Bitcoin falls below $55,000 in 2026 and a 46% chance of a drop below $45,000.

BitMEX co-founder Arthur Hayes said that an extended US–Iran war may force the Federal Reserve to loosen its monetary policy, which will be bullish for Bitcoin.

“The longer this conflict goes on, the higher the likelihood that the Fed has to print money to support the American war machine,” he said, adding:

“That’s when I’m going to buy Bitcoin when the central banks start printing money.”