The interest rate on three-month U.S. Treasury bills, typically the most direct reflection of Federal Reserve policy, has fallen to its lowest level in a year. According to analysts, this is a clear signal that investors are no longer focused on the current policy rate, but on where the Fed is headed in the coming months. And that signal could have massive consequences for the Bitcoin price.
3 month T-Bill…another 52 week low. pic.twitter.com/Gp6VBD7vzd
— Edward Dowd (@DowdEdward) December 2, 2025
Short-Term Rates as an Early Warning Indicator #
The interest rate on three-month government bonds usually moves closely in line with the official policy rate. When that rate falls significantly below it, it indicates that the market is already anticipating further easing. Historically, this happens mainly in the late phase of an economic cycle: short-term rates fall, while long-term rates remain relatively high.
That pattern fits a situation where the central bank moves from tightening to supporting the economy, often because economic pressure is becoming visible beneath the surface.
Fed Pivots Toward Easing #
The timing is notable. The Fed has cut rates twice this year, in September and October, and officially stopped shrinking its balance sheet (QT) yesterday. From now on, maturing bonds will be fully reinvested in T-bills, increasing liquidity in the financial system once again.
On top of that, the market sees a very high probability that the Fed will implement another rate cut in the short term. This explains why these rates are hitting new lows: investors are pricing in a full easing cycle, not just a few symbolic steps.
Short-Term Rates Fall Fast, Long-Term Rates Stay High #
The most striking aspect is the difference between the rapidly falling short-term rates and the ten-year yield, which has remained around the 4 percent mark. This is a classic picture of a central bank beginning to ease while the economy slows down. Not because it has fully recovered, but because the pressure is mounting.
When the interest rate on T-bills is below the policy rate, it typically means investors expect the Fed to keep cutting.
“The Cycle Has Turned” #
According to analysts, this is the clearest signal yet that the top is behind us. The period of monetary tightening appears to be over, and the Fed is moving toward supporting the economy.
The decline in the interest rate on three-year government bonds is therefore a simple but powerful indicator: the cycle has flipped. Where the Fed previously tried to apply the brakes, it is now preparing to protect the economy again.
Now, for Bitcoin, the hope is that the help from the U.S. central bank will be sufficient to keep the economy afloat. If that fails, a resumption of the Bitcoin bull market is practically impossible.