Treasury Yields Slide as Trump Administration Pushes for Rate Cuts, Crypto Investors Take Notice
Treasury Secretary Scott Bessent reaffirmed Tuesday that the Trump administration is prioritizing lower interest rates, a move that could have ripple effects across both traditional and crypto markets.
The cryptocurrency sector has been under significant pressure, first from the bursting of a memecoin bubble and now from a broader risk-off environment. Stock markets have also faced turbulence, with President Trump’s aggressive trade stance escalating concerns. The newly implemented 25% tariffs on imports from Mexico and Canada—alongside additional levies on Chinese goods—have fueled investor uncertainty.
The Nasdaq, already down 2.6% on Monday, extended losses on Tuesday, now trading below its levels from before Trump’s November election victory.
Bond Yields Plummet, Market Bets on Rate Cuts
“We’re set on bringing interest rates down,” Bessent stated in a Fox News interview, reinforcing expectations for a shift in monetary policy.
The 10-year Treasury yield has plunged to 4.13%, down from 4.80% just six weeks ago when Trump took office. Meanwhile, traders are rapidly increasing bets on Federal Reserve rate cuts. According to the CME FedWatch Tool, the probability of at least one rate cut by May has surged to 47%, up from 26% a week ago. The likelihood of two or more cuts by June has climbed from 15% to 36%.
Crypto Eyes Relief, but Inflation Complicates the Picture
A looser monetary policy could provide support for struggling crypto markets, but inflation remains a persistent challenge. Year-over-year inflation stands at 3%, marking four consecutive months of increases. The last time the Federal Reserve achieved its 2% target was back in February 2021.
The central bank now faces a difficult balancing act: lowering rates to prevent an economic downturn while ensuring inflation remains under control. For crypto investors, potential rate cuts could bring much-needed relief, but uncertainty remains the dominant theme.
