Data compiled by Woofun AI shows the U.S. Treasury yield curve is undergoing significant flattening, with the spread between 2-year and 10-year yields narrowing to approximately 28 basis points. This represents the tightest level recorded since April 2025, signaling a robust market expectation for restrictive monetary policy.

Concurrently, the gap between 30-year and 5-year yields has also retreated to its lowest point since last April, reinforcing the broader trend of curve compression.

Skanda Amarnath, Executive Director of EmployAmerica, characterized this development as 'one of the clearest market signals that the Federal Reserve is becoming more hawkish.' The Federal Reserve's recent decision to hold rates steady, coupled with a dot plot indicating a higher projected path for future rates, has strengthened the 'higher for longer' narrative. In such an environment, the enhanced appeal of fixed-income assets diminishes investment demand for non-yielding assets like Bitcoin. Analysts assess that persistent high-interest-rate conditions may hinder Bitcoin from staging a strong upward trend in the short term, potentially leading to a phase of volatile downward pressure intersecting with halving cycle bottoming expectations.