Key Takeaways
- Mike McGlone says the post-2020 trade of selling Treasuries to buy Bitcoin, gold and commodities may be reversing as the 10-year yield approaches 5%.
- Higher Treasury yields increase the opportunity cost of holding Bitcoin and non-yielding gold while tightening broader financial conditions.
- JPMorgan says the debasement trade has recently weakened, although reduced ETF hedging could provide additional support for Bitcoin relative to gold.
The investment playbook that rewarded investors for abandoning US government bonds in favor of Bitcoin, gold and commodities after the pandemic may be approaching a reversal as Treasury yields climb toward 5%.
Bloomberg Intelligence senior commodity strategist Mike McGlone said the trade that emerged when the 10-year US Treasury yield bottomed near 0.5% in 2020 could now be moving in the opposite direction.
Since then, the benchmark yield has increased roughly tenfold, approaching 5% as the Federal Reserve’s tightening cycle transformed the relative appeal of bonds and assets that benefited from years of exceptionally cheap money.
“Sell T-Bonds and buy commodities, gold and Bitcoin” worked when yields collapsed, McGlone said. But with investors now able to earn around 5% from government debt, the opportunity cost of holding non-yielding or volatile assets has increased substantially.
Treasury Yields Challenge Bitcoin and Gold
The shift represents a dramatic change from the environment that helped fuel Bitcoin and gold after the pandemic.
Ultra-low interest rates pushed investors further out on the risk curve as returns available from government bonds collapsed. Bitcoin subsequently emerged as one of the biggest beneficiaries of the monetary debasement trade, while gold and commodities also rallied.
That backdrop has changed.
The 10-year Treasury yield is now approaching 5%, while longer-dated government debt has already crossed that threshold. The 30-year Treasury yield reached 5.31% in August, its highest level since 2007.
McGlone has repeatedly argued that elevated yields could pressure Bitcoin and other assets by tightening financial conditions and offering investors a relatively attractive alternative through government-backed securities.
In August, he described Bitcoin’s rebound as potentially a “gift to sell,” arguing that the cryptocurrency had entered a bear market with possible implications for other risk assets.
Gold could face similar pressure because it generates no income. As yields rise, investors forgo more potential interest by holding bullion rather than bonds.
JPMorgan Says Debasement Trade Is Already Weakening
McGlone is not alone in highlighting the changing relationship between Bitcoin, gold and bonds.
JPMorgan analysts led by Nikolaos Panigirtzoglou said this week that the debasement trade, which regained momentum after the Federal Reserve’s July meeting, has weakened as inflation-adjusted bond yields increased.
Both Bitcoin and gold ETFs attracted inflows after the July Fed meeting, but their subsequent performance has diverged.
Gold ETFs have recovered all the outflows recorded earlier in 2026, according to JPMorgan, while Bitcoin ETFs have recovered only around half.
Institutional positioning nevertheless remains elevated across both assets, suggesting professional investors have not abandoned the trade entirely.
Bitcoin, however, faces considerably more defensive positioning.
Short interest in BlackRock’s iShares Bitcoin Trust ETF (IBIT) remains close to its highest level of 2026, while short interest in the SPDR Gold Shares ETF is below its historical average.
The put-to-call open interest ratio is also higher for IBIT than for the gold ETF, pointing to heavier hedging around Bitcoin.
Could Bitcoin Still Outperform Gold?
Despite the tougher macroeconomic backdrop, JPMorgan sees one factor that could eventually favor Bitcoin over gold.
The bank said elevated short interest and hedging around IBIT reflect greater investor skepticism toward Bitcoin. If sentiment improves and investors unwind those defensive positions, the resulting reduction in hedging demand could provide additional support for Bitcoin relative to gold.
That leaves investors facing a very different equation from the one that prevailed in 2020.
Six years ago, Treasury yields near historic lows reduced the incentive to own government debt and encouraged investors to seek returns elsewhere. Today, yields near 5% mean bonds once again provide meaningful income while simultaneously tightening financial conditions for competing assets.
Whether that marks the end of the Bitcoin-and-gold debasement trade remains uncertain. But McGlone’s argument suggests the hurdle is considerably higher: Bitcoin and gold are no longer competing against bonds yielding almost nothing.
