The U.S. Treasury market is currently experiencing its highest volatility in four months, a development that could jeopardize an anticipated recovery in Bitcoin’s price. This fluctuation comes on the heels of softer-than-expected U.S. inflation data for February, which has strengthened the case for potential Federal Reserve interest-rate cuts.
Following the recent inflation data, some analysts have begun forecasting that Bitcoin (BTC) could experience a price recovery, potentially reaching $90,000 and even higher, as it trades around $82,000. Matt Mena, a Crypto Research Strategist at 21Shares, commented, “With inflation cooling and recession fears still looming but not worsening, Bitcoin could be on the verge of its next major breakout, pushing past the stubborn sub-$90K range.”
However, it is crucial to note that any upward movement in Bitcoin’s price may unfold at a slower pace than expected. The Merrill Lynch Option Volatility Estimate Index (MOVE), which assesses the anticipated 30-day volatility in the U.S. Treasuries market, has surged to 115—the highest level since November 6. Notably, this index has climbed 38% in just three weeks, indicating increased uncertainty in the market.
This heightened volatility in U.S. Treasury notes, which play a pivotal role in global collateral, securities, and finance, negatively impacts leverage and liquidity across financial markets. Consequently, this often results in decreased risk-taking activities, which can further complicate the conditions for Bitcoin’s recovery.
Historically, the MOVE index witnessed a significant collapse following the November 4 election, which eased financial conditions and likely contributed to Bitcoin’s surge from $70,000 to as high as $108,000. The peak of the cryptocurrency’s rally occurred in December-January, coinciding with the MOVE index hitting its lowest levels.
As we navigate this evolving landscape, the relationship between U.S. Treasury market volatility and Bitcoin’s price trajectory will be one to watch closely. Stakeholders in the cryptocurrency space should prepare for possible fluctuations as macroeconomic indicators continue to shape market dynamics.
