Surging Treasury Market Volatility Poses a Challenge to Bitcoin’s Rebound

Bitcoin’s (BTC) price recovery is facing potential hurdles as volatility in the U.S. Treasury market reaches its highest level in four months.

February’s weaker-than-expected inflation data has strengthened the case for Federal Reserve interest rate cuts, prompting some analysts to predict BTC could soon surpass $90,000 from its current price of $82,000.

“With inflation cooling and recession concerns lingering but not worsening, Bitcoin may be set for a significant breakout beyond the stubborn $90K level,” said Matt Mena, Crypto Research Strategist at 21Shares.

However, increased volatility in U.S. Treasuries may temper BTC’s upside momentum. The Merrill Lynch Option Volatility Estimate Index (MOVE), a measure of expected 30-day Treasury market volatility, has surged to 115, its highest since Nov. 6, after jumping 38% in three weeks, per TradingView data.

Given the crucial role of U.S. Treasuries in global finance, higher volatility tends to tighten liquidity and leverage, leading to more cautious risk-taking across financial markets.

Following the Nov. 4 election, the MOVE index dropped sharply, easing financial conditions and aiding Bitcoin’s rally from $70,000 to $108,000. However, as MOVE volatility stabilized in December and January, BTC’s price momentum also faded.

If Treasury market volatility remains elevated, Bitcoin’s rebound could take longer than anticipated.