U.S. Treasury Market Volatility and Bitcoin Price Recovery

The U.S. Treasury market is experiencing its highest volatility in four months, potentially jeopardizing an expected Bitcoin (BTC) price recovery.

U.S. inflation data for February came in softer-than-expected, strengthening the case for Federal Reserve interest-rate cuts. The reading encouraged some analysts to forecast a Bitcoin price recovery to $90,000 and higher, with the currency currently around $82,000.

> “With inflation cooling and recession fears still looming but not worsening, Bitcoin could be on the verge of its next major breakout, pushing past the stubborn sub-$90K range,” said Matt Mena, Crypto Research Strategist at 21Shares.

Any upswing, however, could unfold slower than expected as the Merrill Lynch Option Volatility Estimate Index (MOVE), which measures the expected 30-day volatility in the U.S. Treasuries market, has risen to 115, its highest since Nov. 6, according to TradingView. It has jumped 38% in three weeks.

Increased volatility in U.S. Treasury notes, which dominate global collateral, securities, and finance, negatively impacts leverage and liquidity in financial markets. This often leads to reduced risk-taking in these markets.

The MOVE index collapsed after the Nov. 4 election, easing financial conditions and likely aiding Bitcoin’s surge from $70,000 to as high as $108,000. The cryptocurrency’s rally peaked in December-January as the MOVE bottomed out.