Bitcoin Risks Deeper Drop as Treasury Yield Surge Sparks Market Volatility

Bitcoin (BTC) faces heightened downside risk as fears around risk assets intensify. Analysts are warning that the recent surge in U.S. Treasury yields could trigger a wave of leveraged long liquidations in crypto markets.

Over the weekend, CoinDesk highlighted growing concerns tied to the unwinding of Treasury carry trades—hedge fund strategies exploiting price differences between futures and bonds. These trades are reportedly unraveling, pushing the 10-year U.S. Treasury yield up nearly 70 basis points to 4.5%, with the 30-year nearing the critical 5% level. This sharp move signals distress in funding and credit markets, typically stable during periods of volatility.

ForexLive analyst Justin Low described the rapid rise in yields as a warning sign of deeper market disruption. "It’s all going sideways at the moment," he noted, pointing to potential ripple effects across housing, credit, and equities.

Amid the Treasury turmoil, risk sentiment has deteriorated. S&P 500 futures dropped 2%, and BTC briefly dipped below $75,000 before rebounding to around $76,000. The MOVE Index, a key measure of Treasury market volatility, spiked to 140—its highest since October 2023.

Analytics firm Hyblock Capital warned of possible liquidations between $73,800 and $74,400—levels where many long BTC positions could be forcibly closed. Deeper drops could trigger further selloffs, especially if BTC breaches $70,000, where additional stop-losses and liquidations await.

On the upside, resistance zones for potential short liquidations are identified around $80,900, $85,500, and $89,500.

As Treasury market instability deepens, traders are urged to brace for more volatility across crypto and traditional markets. BTC remains vulnerable to sharp swings driven by macroeconomic stress.