The recent Bitcoin (BTC) stability amid Nasdaq agitation promoted by tariffs has generated emotion among market participants with respect to cryptocurrency potential as an asset for paradise. Even so, the Bulls could want to monitor the bond market where the dynamics that characterized the COVID shock of March 2020 may be emerging.
Nasdaq, the Wall Street index, with a technological flavor that correlates positively with Bitcoin, has fallen by 11% since President Donald Trump announced on Wednesday reciprocal tariffs over 180 nations, increasing commercial tensions and causing reprisal levies of China. Other US indices and global markets have also been beating together with strong losses in risk currencies such as the Australian dollar and a setback in gold.
BTC has remained stable, continuing to operate above $ 80,000, and its resilience is seen as a sign of its evolution in a macro coverage.
“The S&P 500 has dropped approximately 5% this week as investors prepare for the winds of the earnings drive He told Coindesk in an email.
The perception of stability could be rapidly transformed into a self -fulfilling prophecy, solidifying the position of BTC as an asset for paradise in the coming years, as Macroscope pointed out in X.
Treasury Basal Commercial Risks
However, a strong volatility of the short -term disadvantage cannot be ruled out, especially because the trade market bases “faces risks due to the greater turbulence in bond prices.
Base trade implies highly leveraged coverage funds, according to reports, operating a leverage relations from 50 to 1, exploiting the lower discrepancies of prices between treasure futures and values. This exchange exploded in mid -March 2020, since the Coronavirus threatened to derail the global economy, which led to a “cash race” that saw investors sell almost all assets for liquidity in dollars. On March 12, 2020, BTC fell by almost 40%.
“When market volatility increases, as it is now, discovers highly leveraged transport operations vulnerable to large market movements. The explosion in the United States Treasury market in March 2020, which interrupted transport operations, is a recent example. Said the risk of leverage transport trade courage …” said Robin Brooks, managing director and chief economist in the International Institute of Finance, said.
The risk is real because the size of the base trade at the end of March was $ 1 billion, twice the account in March 2020. The positioning is such that a movement of a basic point in the yields of the treasure (which move at prices) would lead to a change of $ 600 million in the value of its petas, according to Zerohedge.
Therefore, the increase in volatility in treasure yields could cause an explosion similar to COVID, which leads to a generalized sale of all assets, including Bitcoin, to obtain cash.
On Friday, the movement index, which represents the implicit or expected volatility of 30 days based on options in the United States Treasury market, increased 12% to 125.70, the highest since November 4, according to the view of the TrainingView data source.
The severity of the situation is underlined by a recent Brookings Institution article, which advises the Federal Reserve to consider specific interventions in the United States Treasury market, which specifically supports the coverage funds involved in the trade of operations during severe stress times in the market.
Let’s see how things take place next week.
