Bitcoin Traders Are Choosing Treasury Bonds Over Crypto: Here's the One Chart That Explains Why
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Key Takeaways
Bitcoin’s institutional carry trade has become less attractive than US Treasuries, reducing incentives for leveraged crypto trading as the bond market increasingly prices in a future Fed rate hike.
Crypto market activity has slowed sharply, with spot trading volume falling to its lowest level since 2019 and exchange flows signaling investor disinterest rather than active buying or selling.
Glassnode says the next major move depends on key price levels and ETF demand: a reclaim of $69,000 and renewed ETF inflows could signal recovery, while a break below the $62,000–$68,000 range could point to further downside.
Bitcoin’s carry trade just lost to the bond market, and the fallout shows up everywhere from spot volume to the order book.
Analytics firm Glassnode reports that the three-month futures basis, the yield institutional traders earn on the cash-and-carry trade that anchors leveraged crypto positioning, has paid less than the 2-year Treasury since February.
Only one prior stretch on record ran this long, from August 2022 into January 2023, and that stretch ended at the cycle low.
The mechanics are straightforward. When government debt pays more than crypto’s version of a risk-free trade, the desks that supply leverage, depth, and liquidity have little reason to stay parked in digital assets. Capital simply migrates to wherever the safer yield sits.
Bond market prices interest rates hike. | Source: Glassnode
Bond pricing reinforces the signal. Glassnode notes the 2-year Treasury yield, widely read as the cleanest gauge of where Fed policy heads next, has sat above the Federal Funds Rate since April, with the gap now the widest since November 2022, positioning that leans toward a future hike rather than a cut.
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Downstream effects are visible across the market. Spot volume, measured in coins rather than dollars so falling prices don’t distort the count, has dropped to its lowest level since 2019.
Exchange deposits and withdrawals have both slowed to some of the quietest combined activity in three years, while balances have stayed roughly flat since early July. Glassnode reads this less as accumulation or distribution than simple disinterest, a pattern the firm associates with the quiet middle stretch of a bear market rather than its end.
Order book positioning tells a similar story from a different angle. Bids have built between 2% and 20% below spot steadily since early June, while resting sell orders above the price have thinned to their lightest levels of the past month. Buyers appear willing, just not at current prices, and thin books in both directions can flip a quiet market into a fast one without much warning.
What Would Change the Picture
Glassnode’s proprietary Bitcoin Vector model currently reads Risk Off, which the organization describes as mild rather than extreme, sitting one band above capitulation in what it calls a tactical pause.
The company calls the setup as historically shallow, with the current drawdown falling well short of prior bear markets by depth, though not yet as prolonged by time as those cycles typically ran.
Recovery signals to watch, per the report, include a reclaim of the $69,000 short-term holder cost basis, a return of trading volume, and spot ETFs shifting from idle to net buying.
The Short-Term Holder Cost Basis at $69K is still the line that decides the next leg. | Source: Glassnode
A breakdown below the $62,000-$68,000 range, paired with exchange inflows picking back up, would suggest the pause has ended in the opposite direction.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Dr. Guneet Kaur is a senior editor at CCN.com and a Science Fellow at Exponential Science. She is a fintech and blockchain expert with extensive experience in digital finance education, blockchain ecosystems, and cryptocurrency markets. She has worked with global media such as Cointelegraph, as well as education and blockchain platforms, to design and lead strategic content and learning initiatives. As an educator and assessor for top-tier executive programs, she bridges real-world fintech trends with academic insight.
Dr. Kaur is also a published researcher and peer reviewer across fintech and data science journals, including Financial Innovation Journal and International Journal of Big Data Intelligence and Applications. Her work spans data-driven analysis, Web3 innovation, and technical content development. With a strong foundation in both industry and academia, she translates complex financial technologies into practical applications, empowering learners, professionals, and institutions across the rapidly evolving digital finance landscape.
