CoinShares, Europe's largest digital asset manager, analysed that for Bitcoin's rally to continue it needs inflows driven by fiscal concerns, not interest-rate expectations. The analysis was disclosed in a report released on Oct. 8, and was reported by Japanese crypto media outlet CoinPost on Oct. 10 local time.

CoinShares said a cumulative $11.1 billion has flowed into crypto funds since mid-July, but inflows have lost momentum this week. The backdrop is a surge in U.S. Treasury yields. The 10-year yield rose above 5.3 percent and the 30-year yield hit 5.7 percent, both the highest levels in more than 20 years.

The U.S. Treasury said in an announcement in August that it doubled the per-operation cap for buybacks of long-term bonds issued between Sept. 9 and Nov. 4, from $2 billion to more than $4 billion. But September was the worst month for U.S. Treasuries in the past four years, and the 10-year yield rose by more than 0.5 percentage point. Treasury Secretary Scott Bessent (스콧 베센트) also acknowledged he could not control the bond market and cited higher oil prices as a reason for rising yields.

CoinShares said investors are focusing on fiscal conditions themselves rather than short-term market support measures. Higher yields usually raise borrowing costs and are negative for Bitcoin, but if they reflect concerns about fiscal sustainability, Bitcoin could appear closer to an alternative to government-issued money than a traditional risk asset, it said.

Employment showed signs of slowing. In the September jobs report released on Oct. 2, the U.S. Bureau of Labor Statistics said nonfarm payrolls rose by 29,000, below the 12-month average of 45,000, and the unemployment rate rose to 4.2 percent. The Federal Reserve raised rates on Sept. 16 for the first time since July 2023, lifting the target range for the benchmark rate to 3.75 to 4.00 percent. The probability of an additional hike in October fell to 23 percent from 71 percent three weeks earlier.

Purchasing managers' index data, however, showed expansion again this week, and consumption and other activity indicators are more resilient than the employment data. With energy prices also staying high due to factors including the Iran conflict, CoinShares said markets see inflation, rather than jobs, driving the next key policy decision.

CoinShares said a large share of inflows since mid-July was bargain buying, and assessed that the recent slowdown reflects uncertainty over three conflicting signals: weak jobs, stubborn inflation and fiscal instability, rather than a deterioration in fundamentals. It said bond markets could ultimately have the biggest impact, and that what would turn Bitcoin's gentle rise into a sustained climb is hedging demand driven by fiscal concerns, which it said would be an indicator to watch in the coming weeks.