Bitcoin is up 2% this week, but shaky supply-demand dynamics and rising “real” interest rates may limit gains.
Last week, CoinDesk noted that inflows into spot ETFs have cooled, pointing to renewed institutional apathy. Further, stablecoin growth has stalled, signaling a lack of new fiat inflows.
The numbers look alarming when compared to the supply or daily issuance of BTC from mining. On average, around 450 new BTC are mined each day under the current issuance schedule based on the protocol that produces a new block roughly every 10 minutes, with a reward of 3.125 BTC per block. block since the halving in April 2024.
Bitfinex’s absorption-to-emission ratio (AER), which measures institutional demand relative to miner issuance, has collapsed to just 1.3x from 5.3x at the end of February. This marks a significant deterioration in demand.
“The current reading of 1.3× places the market firmly within this [passive absorption/erosion] band. Here, demand still marginally exceeds miner issuance, but only just,” analysts at Bitfinex said in a report shared with CoinDesk.
That means any meaningful rally would require strong, consistent inflows – the kind we saw in late 2024 and the first half of 2025.
Real yields rise
That said, the incentive to park money in an asset like Bitcoin that lacks an inherent return or cash flow looks weak as market-determined real interest rates or inflation-adjusted US Treasuries continue to rise.
The yield on the 10-year inflation-protected securities (TIPS) has risen more than 30 basis points to 2.02% since the US and Israel first attacked Iran on February 28. The rate hit a high of 2.12% last week, the highest since June 2025.
This rate of return represents the real rate of return that bonds offer. When it rises, it tends to draw capital away from both risky and zero-yielding assets. Bitcoin ticks both boxes – it is a risky asset linked to a new technology and is often compared to gold by its supporters.
“Bitcoin’s situation is unlikely to improve without lower Fed rates and healthier liquidity as rising real interest rates drive capital away from non-yielding assets,” Bitfinex analysts said.
Furthermore, the market is pricing in elevated real interest rates in the near term, suggesting that this anti-BTC environment may continue.
“In particular, the 10-year real yield is rising faster than the 5-year real yield, suggesting that the market is pricing in tighter financial conditions and higher real yields further out in the curve,” Michael J. Kramer, founder and CEO of Mott Capital Management, said in a market note Monday.
He added that oil prices are in the driver’s seat, weighing on risk assets.
“The [oil rally] is tightening financial conditions across the wider market complex – a process that is likely to continue as long as oil continues to rise,” he added.
