The U.S. Treasury market is facing heightened volatility, potentially hindering bitcoin’s recovery after favorable inflation data suggests interest-rate cuts might occur. Despite optimistic forecasts for bitcoin prices, the increased uncertainty in U.S. Treasuries may slow potential advancements toward the $90,000 mark.

The U.S. Treasury market is currently witnessing its highest level of volatility in four months, which may impede a projected recovery in the price of bitcoin (BTC). Recent U.S. inflation data for February revealed softer-than-expected results, bolstering the argument for potential interest-rate cuts by the Federal Reserve. Consequently, analyses indicate that bitcoin could recover to $90,000 or more, given its present price of approximately $82,000.

According to Matt Mena, a Crypto Research Strategist at 21Shares, “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.” However, any potential rise in bitcoin prices might materialize more slowly than anticipated, as indicated by the Merrill Lynch Option Volatility Estimate Index (MOVE), which measures expected 30-day volatility in the U.S. Treasuries market. This index has surged to 115, the highest level since November 6, reflecting a 38% increase within just three weeks.

The heightened volatility in U.S. Treasury notes, which are critical to global collateral and financial markets, can adversely affect liquidity and leverage. As a result, there tends to be a decreased willingness to take risks within financial markets. Notably, the MOVE index experienced a decline following the November 4 election, which contributed to a favorable financial environment that propelled bitcoin’s price from $70,000 to a peak of $108,000. The cryptocurrency’s rally reached its zenith in the December-January period, coinciding with the MOVE index’s lowest point.

In summary, the recent volatility in the U.S. Treasury market poses a significant challenge to a potential recovery in bitcoin prices. While soft inflation data has optimistically raised expectations for a price increase toward $90,000, the effects of increased volatility, as evidenced by the MOVE index, could delay this recovery. Overall, market conditions remain uncertain, warranting cautious optimism among investors.

Original Source: www.tradingview.com

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