Treasury Market Volatility Surges, Potentially Slowing Bitcoin’s Recovery
Rising volatility in the U.S. Treasury market is creating headwinds for a potential bitcoin (BTC) price rebound, despite cooling inflation data.
February’s U.S. inflation report came in softer than expected, bolstering expectations for Federal Reserve interest-rate cuts. This development led some analysts to predict a BTC recovery beyond $90,000, up from its current level of around $82,000.
“With inflation cooling and recession fears persisting but not worsening, Bitcoin could be on the verge of its next major breakout, breaking past the stubborn sub-$90K range,” said Matt Mena, Crypto Research Strategist at 21Shares, in an email.
However, heightened Treasury market volatility may slow Bitcoin’s advance. The Merrill Lynch Option Volatility Estimate Index (MOVE)—which tracks expected 30-day volatility in U.S. Treasuries—has surged to 115, its highest level since Nov. 6, according to TradingView. The index has climbed 38% in three weeks.
Since U.S. Treasury notes play a critical role in global collateral, securities, and finance, increased volatility reduces market liquidity and leverage, often leading to more cautious risk-taking across financial markets.
Back in November, the MOVE index plummeted after the Nov. 4 election, easing financial conditions and supporting Bitcoin’s rally from $70,000 to $108,000. However, as the MOVE index bottomed out in December-January, BTC’s upward momentum also stalled.
If Treasury market instability persists, it could continue to act as a drag on Bitcoin’s recovery trajectory.
