Bitcoin’s Path to Recovery Faces Headwinds as Treasury Market Volatility Spikes
Bitcoin’s (BTC) price recovery may face delays as U.S. Treasury market volatility reaches a four-month high, potentially dampening investor sentiment.
February’s lower-than-expected inflation data has fueled speculation that the Federal Reserve could cut interest rates, leading some analysts to forecast BTC breaking above $90,000, up from its current $82,000 level.
“With inflation cooling and macroeconomic stability improving, Bitcoin could be primed for a breakout past $90K,” said Matt Mena, Crypto Research Strategist at 21Shares.
However, the rally could be hindered by rising Treasury market volatility. The Merrill Lynch Option Volatility Estimate Index (MOVE), which measures expected 30-day volatility in U.S. Treasuries, has surged to 115, its highest level since Nov. 6, after climbing 38% in the past three weeks, according to TradingView.
Since U.S. Treasuries are a key pillar of global financial markets, increased volatility tends to tighten liquidity and leverage, leading to more conservative risk-taking among investors.
After the Nov. 4 election, the MOVE index fell sharply, creating favorable financial conditions that helped Bitcoin surge from $70,000 to $108,000. However, as Treasury volatility stabilized in December and January, BTC’s price momentum also weakened.
If the current market uncertainty persists, Bitcoin’s anticipated recovery could be slower than expected.
