According to Woofun AI, the yield on 10-year US Treasury bonds issued by the US Department of the Treasury has climbed to 5.3%, reaching its highest level since 2007.

This unusual move in a key macroeconomic indicator has set a clearly bearish tone for the crypto market.

The high-yield environment is reshaping global capital allocation logic, directly squeezing Bitcoin's safe-haven narrative and its channels for capital inflows.

As certificates of deposit, bonds and other fixed-income products offer more attractive risk-free returns, investors tend to pull funds out of risky assets such as equities.

Although some market participants still argue that Bitcoin can withstand fiat currency depreciation, price action reveals a harsh reality: Bitcoin currently trades at $84,000, down 33% from its all-time high (ATH) of $126,000 set last October.

Data compiled by Woofun AI shows that this capital diversion effect is not only visible at the retail level but has also profoundly affected institutional behavior.

When borrowing costs rise, speculative funds are forced to withdraw from more volatile assets to raise liquidity for purchasing fixed-income products, causing Bitcoin, as "digital gold," to face selling pressure similar to that of gold.

Notably, many institutional investors are gradually withdrawing from ETF products that allow Bitcoin exposure without holding a crypto wallet and private keys, and this wave of redemptions has further intensified downward pressure on the market, making it difficult for Bitcoin to replicate its previous glory in the short term.

From a fundamental mechanism perspective, Bitcoin's value support is closely tied to its issuance mechanism, but its "digital gold" attribute is encountering a liquidity predicament in a high-rate environment.

Bitcoin relies on the energy-intensive Proof of Work (PoW) consensus mechanism for mining and undergoes a scheduled "halving" event every four years, which cuts mining rewards in half and significantly increases profitability difficulty.

Of the total supply of 21 million coins, more than 20 million have already been mined, while the final 1 million are expected to be fully released only by 2140.

This extreme scarcity should have made it an ideal tool against inflation and dollar depreciation, similar to gold.

However, rising US Treasury yields often strengthen the dollar, prompting investors to move away from non-yielding assets such as gold and toward low-risk instruments that offer fixed interest.

Therefore, although Bitcoin has the long-term potential to hedge against fiat currency depreciation, in the current high-rate backdrop its liquidity is severely constrained, making it difficult to attract new incremental capital.

Looking ahead, Bitcoin's trajectory will be a fierce tug-of-war between the long-term bullish case for monetary expansion and short-term rate pressure.

Although monetary expansion policies may ultimately lead to fiat currency depreciation, which would benefit hard assets such as Bitcoin, investors must clearly recognize that current elevated rates and rising US Treasury yields pose significant short-term headwinds.

Unless the yield curve reaches an inflection point and risk-appetite capital returns to the market, Bitcoin will find it very difficult to break out of its current suppression range.

This market dynamic shows that before macroeconomic and financial conditions improve, the probability of Bitcoin revisiting its all-time high is extremely low, and market participants need to be wary of potential risks from short-term volatility.

John Hancock Hedged Equity & Income Fund (HEQ) is a closed-end fund that seeks to provide a high level of current income and long-term capital appreciation through a hedged equity portfolio and income-generating strategies.