As the yield on the U.S. 30-year Treasury bond rose above 5.3 percent for the first time since 2007, bitcoin has been hit head-on by the shock from long-term rates.

On Aug. 18 local time, blockchain media outlet CryptoSlate reported that Galaxy Digital released a report the same day saying crypto collateralised lending has declined by $22.53 billion from its peak. Bitcoin rose as high as $64,600 during the session.

The rate rise ran counter to moves that had lowered the likelihood of a U.S. Federal Reserve rate hike in September due to weak economic data. Long-term rates often fall when worries about an economic slowdown increase, but the 30-year yield climbed to 5.2954 percent and at one point hit 5.314 percent intraday. That also raised the chance it could close above 5.3 percent for the first time in 19 years.

Markets see concerns about the U.S. fiscal path and a surge in corporate bond issuance driven by expanding investment in artificial intelligence as factors behind the rise in long-term yields. The 30-year real yield is about 3 percent, holding at its highest level in 18 years, as governments and AI companies increase borrowing at the same time, sharply boosting demand for long-term funding. Corporate bond issuance this year by Alphabet, Amazon and Meta alone totals about $220 billion, more than double the 2025 annual total of $108 billion.

This environment also weighs on bitcoin. Investors can secure real returns that reflect inflation through U.S. Treasuries, while bitcoin does not pay interest simply for holding it. The longer long-term yields stay high, the greater the burden on bitcoin to compete with U.S. Treasuries to attract long-term investment funds.

The size of collateralised lending in the crypto market has fallen sharply from the previous peak. Galaxy put crypto collateralised lending at $56.16 billion as of the second quarter of 2026. That was down $11.33 billion from the previous quarter and $22.53 billion below the peak of $78.69 billion in the third quarter of 2025.

Borrowing on DeFi lending apps also fell more than 53 percent to $21.94 billion as of July 21 from $47.13 billion in September last year. Total crypto-related debt fell for a third straight quarter.

Still, the current contraction differs from 2022. In 2022, crypto collateralised lending fell more than 55 percent in a single quarter and then declined 9 percent and 29 percent in the following two quarters. The declines over the past three quarters were about 10 percent, 5 percent and 17 percent, relatively mild. Galaxy judged this as gradual de-risking.

Derivatives exposure, however, is rising again. Total futures open interest was $103.2 billion at the end of the second quarter and rose to about $114 billion at the end of July, up nearly $11 billion in a month. Bitcoin futures open interest also fell to about $45 billion during the quarter but recovered to around $48 billion. Galaxy said open interest does not directly mean leverage, adding some positions may be hedges against spot holdings. Even so, it said it was clear that market structure is changing.

A key point is where bitcoin weakness begins. If bitcoin weakens but the decline in collateralised lending remains gradual as it has been, this sell-off is likely driven by macro factors led by high real rates and large-scale supply of Treasuries and corporate bonds. If, instead, the contraction in collateralised lending suddenly steepens and futures open interest also collapses sharply, it would resemble the credit-driven chain liquidations of the previous cycle.

An upside scenario was also presented. If the 30-year yield falls below 5.1 percent or real yields ease from current peaks, bitcoin could have room to try the $67,000 to $72,000 range again. That would assume futures open interest stays broadly stable and collateralised lending does not expand aggressively again.

If the 30-year yield rises further to the 5.4 to 5.7 percent range and real yields stay high, bitcoin could be pushed below $60,000 toward the $52,000 to $58,000 range. Even if futures open interest drops sharply and liquidations increase, if collateralised lending continues to decline gradually as it has been, it could be read as a macro-driven downturn different from the 2022-style collapse of lenders.

Ultimately, this phase is a test of whether bitcoin can hold up in a long-term interest rate environment it has never faced before. With a $22.5 billion credit contraction already under way, the remaining variables hinge on whether rate pressure in the bond market intensifies further or whether leverage within crypto is shaken again.