The U.S. Treasury market is currently facing its highest volatility in the past four months, which could impede the anticipated recovery in bitcoin (BTC) prices.
The U.S. inflation data for February was lower than expected, bolstering speculation surrounding potential interest-rate cuts by the Federal Reserve. This has prompted some analysts to predict a bitcoin price rebound to $90,000 or more. At present, it hovers around $82,000.
“Given the cooling inflation and persistent but stable recession concerns, Bitcoin may be on the cusp of a substantial breakout, surpassing the challenging sub-$90K threshold,” stated Matt Mena, Crypto Research Strategist at 21Shares, in an email.
Nevertheless, any upward movement might unfold at a slower pace than anticipated due to the Merrill Lynch Option Volatility Estimate Index (MOVE), which tracks the expected 30-day volatility in the U.S. Treasuries market, reaching 115—the highest since November 6, according to TradingView data. This index has surged by 38% over the last three weeks.
Heightened volatility in U.S. Treasury notes, which significantly influence global collateral, securities, and finance, adversely affects leverage and liquidity in financial markets, often leading to a decline in risk appetite.
The MOVE index declined sharply following the November 4 election, easing financial conditions that likely contributed to BTC’s ascent from $70,000 to as high as $108,000.
The cryptocurrency’s rally peaked during December and January as the MOVE index reached its lowest point.
