Bitcoin Faces Liquidation Risk as Treasury Market Unwind Roils Risk Assets
The sudden surge in U.S. Treasury yields is rippling through global markets, placing renewed pressure on risk assets — and cryptocurrencies are in the crosshairs.
Bitcoin (BTC) briefly dropped below $75,000 on Wednesday before recovering slightly, as the fallout from an unraveling Treasury basis trade spooked investors. The move underscores a broader shift away from risk amid tightening financial conditions.
Market watchers point to the unwinding of leveraged “carry trades” — hedge fund strategies that profit from pricing inefficiencies between Treasury bonds and futures — as a core driver of the disruption. The resulting liquidity crunch has pushed 10- and 30-year yields up nearly 70 basis points in days, an abnormal move that signals stress in credit markets.
“This kind of vertical spike in yields typically reflects forced liquidations, not measured repositioning,” said Justin Low of ForexLive. “It’s flashing warning signs across funding and repo markets.”
The tremors are being felt in crypto. According to data from Hyblock Capital, BTC faces a dense band of potential long liquidations between $73,800 and $74,400. A breakdown into that zone could trigger a cascade of margin calls and algorithmic selling, further accelerating downside volatility.
“Below $74K, the risk of a liquidation spiral increases,” Hyblock analysts said. “We’re tracking additional pressure points at $70K and in the $66K–$67K range, where retail stop-losses could compound the selloff.”
Equity markets aren’t immune either, with S&P 500 futures down 2% on the day. The MOVE index, a key measure of Treasury volatility, surged to 140 — its highest since late 2023 — reflecting investor anxiety about deeper structural issues.
Despite the fear, upside targets remain. Should BTC rebound, Hyblock identifies $80.9K to $92.6K as major resistance zones where short liquidations could fuel a sharp rally.
For now, the outlook remains fragile, with macro forces rather than crypto-specific catalysts driving sentiment. Traders are closely watching Treasury yields, as further disruptions in traditional finance could continue to dictate the crypto market’s next big move.
