Rising Yields Can’t Stop Bitcoin: Here’s Why

A cooler inflation report failed to stop the historic bond sell-off, but rising yields also failed to stop Bitcoin from recording its best quarter since 2024 and its best Q3 since 2017. We're going to talk about that and more right now on The Daily Wolf. Let's go. >> [music] >> What is up, everybody? Welcome to The Daily Wolf on Yahoo! Finance. I am your host Scott Melker, also known as The Wolf of All Streets. Now, I give you a lot of my personal insight here, but most of it comes from my incredible guests who I interview on a daily basis at 9:00 a.m. Eastern Standard Time on my YouTube channel, which is at youtube.com/scottmelker. So, if you like this content, I highly encourage you to go listen to the alpha that comes from the best guests in the industry. Talk about alpha. Bitcoin doing exceptionally well in environment when Bitcoin is not supposed to do exceptionally well. Let's take a look at a couple headlines here. Bitcoin posts strongest Q3 since 2017. Now, the next headline on this story, US Treasury yield surge to 24-year high in global bond sell-off. Now, why do those two things matter? First of all, in a vacuum, Bitcoin does not traditionally do exceptionally well in Q3. Summers are usually a down time, and even if you believe in the 4-year cycle, you would have expected Bitcoin to remain boring through October. It's October 1st, we call it Uptober in crypto. Uh through October, but of course, this time that large move came in August and basically preempted the 4-year cycle. So, in a vacuum, it's surprising that Bitcoin has done exceptionally well in Q3, especially in 2026 in Q3. It's even more astounding when you look at what's happening in macro because for most people they believe that risk assets, of which they include Bitcoin, I do not, but that assets like Bitcoin should have underperformed with so much pressure on the bond market. So, during the same quarter that Bitcoin went up 43%, which is what it did in July, August, and September, long-term treasuries lost approximately 7.7%. That does not seem like a big number, but that's a monster number for something that is supposed to be risk-free. 7.7% in just 3 months. The broader US bond market declined approximately 3.4%. The 10-year yield recorded its largest quarterly increase since 1994. And this morning, the 10-year and 30-year yields reached their highest level collectively since 2002. Now, yesterday we unpacked the cooler than expected PCE report. Of course, PCE is the Fed's preferred gauge of inflation. I told you yesterday how they simply changed how it was calculated to make it look like inflation was not as bad as it was, but even taking that aside, you would think that if the market believed that inflation was cooling by the very preferred gauge that the Fed uses, that you would see a cooling off of interest rates as well. But no, no, no. They reversed for a few hours, which is exactly what happened when Bessent initially announced bond intervention to bring down rates, and then the bond vigilantes and the actual market said, "No, no, no, no, no." Like Dikembe Mutombo, and sent the interest rates of bonds up, and sent the actual price of bonds down. TLT, which which how I generally, from a charting perspective, measure what bonds are doing, has made an all-time low. And it's been trading since 2002, and it is smashing down through that low and gapping down even further today. The bond market is an absolute mess right now. So, it's not necessarily, I would say, rejecting the inflation report, cuz that's just one PC report, but what it is saying is that one good inflation report cannot offset expensive oil, strong growth, government borrowing, and long-term fiscal risk. So, you would think, once again, that in a world where bonds are dumping and interest rates are flying, Bitcoin would be under pressure because it's supposed to be a risk asset, there's less liquidity, uh situation is tightening, all those things. But, if interest rates are rising and bonds are dumping because people no longer believe in the system and are afraid of fiscal dominance and irresponsibility and monetary and irresponsibility, that's actually what Bitcoin is built for. And in my mind, that's why Bitcoin is doing so well. And it's, of course, doing it so well right on time for the train to leave the station for the next bull market, if you do believe in the cycles. What a time to be alive, right? And we even saw today that City Citigroup uh revised their outlook for Bitcoin, I think a target of 113,000 in 2027, which I think is comically low, to be quite honest. And they pointed at these exact factors, that there was macro tailwinds for Bitcoin, even though they may have been viewed as macro headwinds, and of course, because of the massive ETF demand that we have seen. And it's crazy, inflation finally gave the bond market some good news, and the bond market looked at oil, the deficit, and the Treasury calendar, and said, "That's adorable. I don't believe you." So, Bitcoin survived one of the most hostile bond market environments in years in the last quarter. But, crypto's Washington strategy was considerably less successful. And here's the story. Remember what I said I would we would need to do like a shot every time we say Clarity Act? I I tried not to do it because I didn't want to be a drunk, but here we are. Clarity Act. Clarity Act. Two shots. Crypto industry gave 8 million to Clarity Act lobbyists who didn't close the deal. In fact, crypto spent 8 million lobbying for the Clarity Act out of a total 13 million in the first half of 2026 and got precisely zero Democratic votes. Now, we all know that no Democrat was going to vote for it unless they believed that all the other Democrats that needed to pass it were going to vote for it, but still a vote of 49-50 after spending eight million dollars on, I believe, 42 outside lobbying firms just to get the Clarity Act passed and had zero to show for it. Now, I'm old enough to remember when people say that the crypto industry and their money bought the election for Donald Trump, they were too powerful. Well, they're not even powerful enough to get one Democratic vote for market structure and the Clarity Act. Now, it says that Coinbase led the efforts from a corporate perspective, 2.2 million in spending, Kraken spent a million dollars, and once again, after all of that uh we saw nothing for it. Clarity Act did not pass. Now, maybe, you know, it's a different world and the ethics clause and all these things were too large of obstacles to surmount. That is very possible, but 8 million dollars is a hell of a lot of money for no return and really just shows you how gratuitous money's influence in Washington is since we are saying the quiet parts out loud. So, it's very clear, though, that crypto has successfully bought some access, attention, expertise. The lobby has become huge, but what we cannot buy is political consensus. There There no amount of money that was going to get the Clarity Act passed in this specific scenario. So, moving on. The next big story, they may not have been able to get consensus in Washington on the Clarity Act, but we have over 200 companies having consensus on a new stablecoin, and that is this one right here. OUSD stablecoin goes live with Visa, Mastercard, and Stripe behind it. I told you about this story probably in June that this was announced, but it is now officially live, and this is really big news. OUSD, of course, is OpenUSD, which is a consortium of different fintechs and payment companies coming together to launch their own stablecoin to compete in an ever-growing massive market where there's basically free money because of high interest rates. This is being run by Stripe. They, of course, acquired Bridge in a unicorn deal, and the CEO of Bridge is also running this blockchain. Of course, they're launching on multiple blockchains, even though Stripe has their own blockchain, Tempo, where the bulk of the liquidity will be. I believe it's on Ethereum, Solana, Base, and Tempo. The reserves will be held at BlackRock, BNY, and I don't know if it's Lead or Lead Bank. So, I'm going to go with Lead Bank. L E A D. Lead Bank. So, what's interesting here is that with a USDC or USDT, the earnings for the stablecoin, which are largely made by holding short-term treasuries and earning the yield, are kept by the company. Circle is public. Tether is private, but they're kept by the company. In this case, you have five founding members, even though there's a consortium of over now 200 companies, right? But five founding members will split the equity, and they've invested a billion dollars for liquidity initially, and depending on the usage, they will accrue more or less equity or the earnings from the actual stable coin. So, this is a stable coin whose earnings will accrue to the companies that are actually promoting and using it rather to the private company behind the stable coin itself. The five founding members, there was a huge debate when this launched cuz there were 140 logos, the Blackrocks, everyone in the world, and some of those companies said, "Why is my logo on this? I've never even heard of it." Right? So, they hadn't even gotten the memo. But this is five founding members: Coinbase, MasterCard, Shopify, Stripe, and Visa. I mean, MasterCard, Stripe, and Visa are three of the largest payment companies in the world, Shopify one of the biggest stores, and of course Coinbase, who also, by the way, makes most of the money from Circle's USDC, now competing directly with USDC with the OpenUSD stablecoin. It'll be interesting to see how big this becomes, but Stripe was already using stablecoins behind the scenes for settlement, and now they will exclusively be using, apparently, OUSD, and you have to imagine there's major incentive for these companies to use and to push this. And by the way, just as a total uh aside to the stablecoin story, I have another story. HSBC is launching a stablecoin, and they they named it Red Coin. Chinese company names company it names stablecoin commie coin. So so socialism coin. Red coin. Can't believe they called it Red Coin. Okay, listen, we don't know how big this is going to be. It just blew my mind that HSBC uh basically spent 161 years building one of the world's largest and most reputable banks and then named its stablecoin like something launching on pump.fun. Red Coin. Red Coin. Okay, now moving on from uh China to Europe, we have this story. EU questions Binance over continued operations despite wind-down order, FT reports. Now, this is a two-part story. First we'll talk about finance but then we'll talk about Mika 2.0. You'll remember that Mika was finally instituted which is the regulatory regime for all of Europe in June. And now they're already soliciting comment and opinions for Mika 2.0 to fill the gaps. I mean Mika literally had a 1.0 already written. They've gotten comments on 2.0 and we can't even get the clarity act done with $8 million of our money. Right? But back to the finance story. You'll remember that Binance thought that they were going to remain compliant in Europe right until the deadline when the Greek authorities who they had filed with pulled their application. We found out that Christine Lagarde herself was behind basically getting Binance buying banned from Europe. But interestingly we have multiple regulators, the ESMA which I guess is like the SEC of of Europe plus France, Germany, and Greece is examining whether Binance is still servicing European customers through an exemption called reverse solicitation which is like when you walk up to the drug dealer instead of the drug dealer walking up to you. Reverse solicitation. Well, I don't know anything about that but I've seen it happen in Washington Square Park in New York and it's disgusting. Um so what we have here basically is Binance still servicing some customers through an exemption because the customers came to them rather than them going to the customers. The regulator is understandably trying to close that loophole and as a result of that and other inefficiencies they've seen with Mika 1.0 they're already working on Mika 2.0. I I think it's crazy that with all the hate Europe gets they're just way ahead of the United States on legislating and regulating the crypto industry. And of course I have one more story for you, and it is a how not to invest. Hit it. >> How not [music] to invest. >> How not to invest. >> I don't know what to call S- CFTC secures over 30 million judgment against defendants in Fundziziz. Fraud case. First of all, people put that much money into something called Fundziziz? They can't even spell it. There's a You can't have the S and the Z. You could have Fundziziz with a Z to be cool, but you can't have the fun spelled right and then just add a Z to it. That is nonsense. It should have been your first red flag when investing in this. But this was a proprietary trading algorithm, means meaning we take your money and we don't tell you what we're doing with it. It's proprietary. It's secret. But trust us, the profit will come out. The two defendants were ordered to pay approximately 15.7 million in restitution, meaning they stole that much, and an approximately equal civil penalty of 15 million more dollars. Do not send people money to trade for you, especially when you have no idea what they are doing with that money. How not to invest in Fundziziz. Fundziziz. Fundzizizisms. Okay, that is all that we have for you today. Bitcoin completing an incredible quarter and just rearing up for when the bull market should actually begin if you believe in the cycle. We'll talk about more tomorrow. Peace.