The Bitcoin Bull Run has already stagnated with the ongoing sales of long -term support wallets and a deceleration in ETF tickets. To make things worse, another less known but significant market variable seems to be turning against BTC bulls, indicating new challenges on the horizon.
That market variable is the movement index, created by Harley Bassman, a former managing director of Merrill Lynch. The index calculates the implicit volatility using a weighted average of the options of the options in the one month’s treasury options (2, 5, 10 and 30 years). This method captures the collective expectations of market participants on future movements of interest rates.
The movement index increased from 77 to 89 in three days, marking the strongest increase since the beginning of April, when the rates of President Donald Trump shook global markets, including Bitcoin, which fell to $ 75,000.
More importantly, impulse indicators such as the MACD are pointing out a clear bullish change, suggesting that the index is ready for continuous profits. That requires caution by Bitcoin bulls, since it is known that the spells of greater expected volatility of the bond market, as captured by the movement index, cause liquidity worldwide.
The United States Treasury notes are widely considered as high quality liquid assets and form an cornerstone of the group of global guarantees, helping to reduce the credit risk for lenders and facilitate a gentle flow of funds in financial markets.
Therefore, the greatest volatility in treasure notes tends to interrupt liquidity, increase loan costs and create domain effects on credit markets and the broader financial system. In such situations, lenders demand higher risk premiums, and market participants withdraw from more risky assets, ultimately braking the flow of funds and adding stress to global markets.
In addition, the greatest volatility in Treasury notes often leads bond holders to reduce the risk of duration by changing the longest date bonds (as treasure notes at 10 or 30 years) to short -term values, such as two -year notes or treasure invoices.
This “quality flight” or “safety flight” generally accompanies a broader market sale, since investors reduce exposure to corporate bonds and other risk assets to preserve capital amid the volatility in the treasure market.
Therefore, it is not surprising that historically the BTC prices manifestations have been characterized by the decrease in trends in the movement index and vice versa.
To cut the persecution, the last rebound in the movement index could exacerbate the pain of the BTC market, potentially deepening the price setback.
