BTC demand stalls as rising real interest rates hit rally

• Institutional demand for Bitcoin has significantly weakened, with the absorption-to-emissions ratio dropping from 5.3x in February to just 1.3x recently.
• Real interest rates are climbing, as seen in the 10-year TIPS yield hitting a high of 2.12%, making non-yielding assets like Bitcoin less attractive to investors.
• Stagnant stablecoin growth and cooling spot ETF inflows indicate a lack of fresh liquidity entering the cryptocurrency market.

Shifting Supply and Demand Dynamics

Despite a modest 2% price increase this week, Bitcoin faces a challenging supply-demand environment. Following the April 2024 halving, the network produces approximately 450 new BTC every day, based on a block reward of 3.125 BTC. While institutional interest previously surged, recent data suggests a period of "institutional apathy."

Analysts at Bitfinex report that their absorption-to-emissions ratio (AER)—which compares institutional buying to miner production—has plummeted. At 1.3x, demand is only marginally higher than daily issuance. This is a sharp decline from the 5.3x ratio recorded in late February, suggesting that the current rally lacks the aggressive buying pressure seen earlier in the year.

The Pressure of Rising Real Yields

A significant headwind for Bitcoin is the surge in real interest rates, which are inflation-adjusted U.S. Treasury yields. The yield on 10-year inflation-protected securities (TIPS) has risen by over 30 basis points, reaching 2.02% and peaking at 2.12% last week—the highest level since June 2025.

Because Bitcoin does not offer a native yield or cash flow, it struggles to compete when government bonds offer high guaranteed real returns. This shift typically drives capital away from risk assets. Bitfinex analysts noted that without a shift in Federal Reserve policy toward lower rates and improved liquidity, Bitcoin's ability to sustain a rally remains limited.

Macroeconomic Constraints and Market Outlook

The broader economic landscape is also weighing on digital assets. Michael J. Kramer, founder of Mott Capital Management, observed that the 10-year real yield is rising faster than the 5-year yield, signaling that the market expects tighter financial conditions to persist.

Furthermore, the following factors are contributing to the current market stagnation:

• A lack of fresh fiat inflows through stablecoins.
• Rising oil prices, which are tightening global financial conditions.
• A cooling of interest in spot Bitcoin ETFs compared to the high-demand period of early 2025.

As long as oil prices continue to climb and real yields remain elevated, the environment for risk assets like Bitcoin is expected to remain restrictive.