Treasury-market volatility has accelerated to its highest level since March, creating a sharp contrast with the subdued volatility priced into bitcoin and U.S. stocks. Bitcoin’s BVIV and Wall Street’s VIX remain near their year-to-date lows, indicating that risk markets have yet to reflect the pressure emerging in bonds.
The MOVE index, which tracks expected volatility in U.S. Treasury securities, climbed from about 80 on Tuesday to 104 on Thursday. According to CoinDesk data, that was its highest reading since March, when MOVE reached 199.
Bitcoin options traders remain relatively calm. Volmex’s annualized 30-day Bitcoin Implied Volatility Index, or BVIV, stood around 37, close to its year-to-date low of 35. The index measures expected bitcoin price volatility over a four-week period based on options pricing.
The Cboe VIX, which measures expected volatility in the S&P 500, was also close to its yearly low of 14. The muted readings show that demand for protection against volatility has not increased in bitcoin and equities to the same degree as it has in Treasury markets.
The widening gap comes as Treasury-market conditions become more unsettled. Government bonds form a key foundation for global credit and financial markets, meaning increased bond volatility can contribute to tighter financial conditions and potentially reduce appetite for risk assets.
Global Yields Add Pressure
The increase in Treasury volatility coincides with rising government bond yields across global markets. The war in the Middle East has pushed oil and diesel prices higher, adding uncertainty to the inflation outlook and raising questions about how much additional tightening central banks may need.
The U.S. 10-year Treasury yield briefly climbed to 5.2% on Thursday before retreating to 5.163%.
The S&P 500 was trading near 6,350 the last time MOVE reached comparable levels in March. Since then, the index has risen to 7,704, representing a gain of roughly 21%. Bond traders, meanwhile, are paying considerably more to hedge against potential interest-rate swings.
The relationship between Treasury and equity volatility has also weakened. Over a 20-day period, the correlation between MOVE and the VIX dropped to −0.06, turning negative for the first time since April 2024, although the reading remains close to zero.
The relationship between MOVE and BVIV is more pronounced, with a correlation of −0.37, among the lowest levels recorded in years. That means expected bitcoin volatility has remained near its yearly floor even as volatility in the Treasury market has increased.
As CoinDesk reported earlier this week, higher Treasury yields on their own have not maintained a consistent relationship with bitcoin returns, underscoring the different signals currently coming from bond and crypto markets.
