According to Woofun AI, analyst Benjamin Cowen points out that as the midterm elections approach, the 10-year U.S. Treasury yield is about to peak and turn lower, and this turning point in the macro trend will deliver a medium-term boost to risky assets such as Bitcoin.

Historical patterns and current data both validate Cowen's judgment. The 10-year U.S. Treasury yield already touched a high of 5.342% on October 1, the highest level since early 2002.

Looking back at the two midterm election years of 2018 and 2022, yields peaked between early October and mid-November in both cases, then began a downward path from mid-November into December. Although Cowen previously viewed 5% as the target level, he admits that 5.4% to 5.6% remains a potential new range.

After the Federal Reserve raised rates in September, market sentiment reached a peak of panic around the October 28 meeting. Notably, the probability of a rate hike in October plunged from 64% to 17.7% within a single week, a sharp shift that reflects fading concerns among bond traders that the Fed is not tightening aggressively enough.

Immediate shocks to macro fundamentals have further reinforced expectations of falling rates. Given low inflation and weak labor market conditions, the Fed has reason to pause its rate hikes. Employment data released in September showed only 29,000 new jobs added, and this weak reading directly eased market fears about further tightening.

Data compiled by Woofun AI shows that last week, under the pressure of the highest yields in 24 years, Bitcoin struggled, but within an hour of the jobs data release, investors betting against Bitcoin lost about $27.5 million and the price quickly rebounded.

If the 2-year U.S. Treasury yield declines as well, the pressure on the Fed to raise rates aggressively will ease further, and Cowen expects rates to begin falling in mid-November, shortly after the midterm elections.

However, the longer-term outlook remains full of uncertainty. Even if rates only form a temporary peak, the relief it brings may be very limited. Cowen stresses that over the next 10 to 20 years, long-term interest rates will continue to rise, which could keep pressuring assets like Bitcoin that generate no yield. Poor inflation data could still trigger a new wave of bond selling, and investors need to guard against the risks posed by a repeated back-and-forth in the macro environment.