Fidelity: Bitcoin's Correlation with US Treasury Real Yields Hits Record High Above 0.6

Bitcoin’s Correlation with U.S. Treasury Yields Reaches Record High, Fidelity Digital Assets Reports

New York, NY – Bitcoin’s correlation with the real yield on 10-year U.S. Treasury bonds has surged to a record high of over 0.6 in 2026, according to a research brief from Fidelity Digital Assets. This marks a significant shift from Bitcoin’s historical decoupling from interest rate movements.

The report, authored by Zack Wainwright, highlights that while Bitcoin and 10-year real yields were largely uncorrelated for an extended period after Bitcoin’s inception, a positive correlation has emerged in recent years. This trend has now reached unprecedented levels.

Real yields, which are adjusted for inflation and typically measured by the yield on Treasury Inflation-Protected Securities (TIPS), have been on an upward trajectory. The correlation coefficient, ranging from -1 to 1, indicates that a reading of 0.6 suggests a moderately strong tendency for Bitcoin and real yields to move in the same direction. Fidelity’s analysis compares real yields with Bitcoin’s market capitalization, though the specific timeframe for the correlation calculation was not detailed in the brief.

Recent data shows that yields on 10-year U.S. Treasury bonds have climbed to their highest levels since Bitcoin’s creation. On October 5th, the 10-year yield closed at 5.31%, surpassing the previous high of 4.98% recorded on October 19, 2023. Concurrently, the 10-year real yield reached 2.95% on the same day, exceeding the 2.52% seen on October 25, 2023. Both yields saw a slight retreat on October 16th, closing at 5.09% and 2.74%, respectively.

Fidelity noted that Bitcoin has experienced a nearly 30% increase in the past two months, while 10-year Treasury yields have risen by over 10% during the same period. This 10% figure refers to the relative increase in the yield itself, not an increase of 10 percentage points.

Between August 14th and October 14th, the 10-year yield climbed from 4.68% to 5.19%, a gain of 0.51 percentage points, representing a relative increase of approximately 11%. During this timeframe, Bitcoin’s daily closing price on Binance rose from around $63,044 to $81,682, a surge of about 29.6%. The 10-year real yield also increased from 2.41% to 2.84% over these two months, aligning with Fidelity’s observation of a positive correlation.

U.S. Debt Exceeds $40 Trillion Amid Rising Interest Costs

Fidelity contextualizes Bitcoin’s performance against the backdrop of escalating U.S. fiscal pressures. The report points out that U.S. federal debt has surpassed $40 trillion, with rising interest rates significantly increasing the government’s borrowing costs. Interest payments have recently overtaken Medicare as the second-largest expenditure in the federal budget.

Data from the Treasury Department’s “Debt to the Penny” shows that total federal debt first exceeded $40 trillion on August 18th and stood at $40.39 trillion as of October 15th. Of this total, $32.54 trillion is held by the public, and $7.85 trillion is held in intragovernmental accounts.

The assertion that interest payments have surpassed Medicare is based on data from the Treasury’s Fiscal Data website, with the latest available figures up to the end of August. For the first 11 months of fiscal year 2026, net interest payments amounted to $1.017 trillion, indeed higher than Medicare’s $979.3 billion. However, the Treasury’s final monthly report for the full fiscal year indicated that net interest payments were $1.052 trillion, slightly below Medicare’s $1.073 trillion, with a difference of approximately $20.9 billion. Social Security remained the largest expenditure at $1.667 trillion, placing net interest in third place for the full year.

Bitcoin as a Store of Value Amid Fiscal Strain

Fidelity suggests that some investors are increasingly viewing Bitcoin as a store of value during periods of fiscal stress. The cryptocurrency’s protocol features a fixed supply cap of 21 million coins and a transparent issuance schedule. These characteristics, Fidelity argues, may position Bitcoin as a potential hedge against currency debasement. Furthermore, the firm believes Bitcoin is gaining traction as a diversification tool within investment portfolios.

The report anticipates that if current debt and interest rate trends persist, interest payments could soon become the largest expenditure in the federal budget. This scenario, Fidelity posits, will likely draw greater market attention to alternative stores of value. Based on fiscal year 2026 figures, net interest payments are still about $615.4 billion shy of Social Security expenditures, the largest budget item.

The Treasury’s final monthly report projects a federal budget deficit of $1.992 trillion for fiscal year 2026 (October 2025 to September 2026), an increase from the $1.775 trillion deficit in fiscal year 2025. This marks the highest deficit since fiscal year 2021’s $2.77 trillion.

Total revenue for the year is projected at $5.40 trillion, a 3.2% increase year-over-year, while expenditures are expected to reach $7.40 trillion, a 5.5% rise. Expenditure growth is outpacing revenue growth. Within revenue streams, corporate income tax is forecast to decrease by 15.6% from $452.1 billion to $381.4 billion.

On the expenditure side, defense spending is set to increase from $916.6 billion to $965.2 billion, and Social Security payments are projected to rise from $1.581 trillion to $1.667 trillion. Net interest payments are estimated to increase by 8.4% from $970.4 billion to $1.052 trillion, a higher growth rate than defense (5.3%) and Social Security (5.5%).