coindesk.com
Bitcoin's BTC$96,612.29 10% rally since the start of the year has analysts predicting an advance into six figures for the first time since mid-November. The outlook gains credence as U.S. Treasury bonds, the bedrock of global finance, lose volatility and settle into their calmest state since 2021.
The U.S. Treasury market is said to be of outstanding credit quality with an extremely low risk of default. The debt is widely used as collateral in everything from loans to derivatives — underpinning much of the world's financial plumbing.
When Treasury prices move wildly, it tightens credit and disincentivizes risk-taking across the economy and financial markets, leading to caution in stock and cryptocurrency markets. In contrast, steadier bond prices ease credit creation, prompting investors to allocate more capital to riskier assets.
Guess what? The ICE BofA MOVE index, which represents the expected or implied volatility in Treasury bonds over four weeks, has dipped to 58, the lowest since October 2021, extending a decline that started in April last year, according to data source TradingView.
In other words, the bond market environment is increasingly favoring rallies in bitcoin, currently trading around $96,300, and tech stocks.
While some bitcoin proponents call it digital gold, historically it has tended to move in line with Wall Street's tech-heavy index, the Nasdaq 100, and mostly in the opposite direction to the MOVE index.
This inverse relationship with the MOVE index held through bitcoin's 2022 crash and the bull run since 2023.
That said, past data doesn't guarantee future results, and no single signal, on its own, guarantees gains. The falling bond market volatility is just one more factor boosting the bull case for bitcoin, alongside fresh ETF inflows.
Markets could face headwinds if U.S.-Iran tensions escalate or if disappointment over delays in the Clarity Act crypto regulation bill grows.