Bitcoin Bulls Should Keep an Eye Out for Spike in Key Bond Market Index

The bitcoin BTC$89,274.20 bull run has already stalled with ongoing sales from long-term holder wallets and a slowdown in ETF inflows. To make matters worse, another lesser-known but significant market variable appears to be turning against BTC bulls, signaling new challenges on the horizon.

That market variable is the MOVE index, created by Harley Bassman, a former managing director at Merrill Lynch. The index calculates implied volatility using a weighted average of option prices on one-month Treasury options across multiple maturities (2, 5, 10, and 30 years). This method captures the collective expectations of market participants about future interest rate movements.

The MOVE index has surged from 77 to 89 in three days, marking the sharpest rise since early April, when President Donald Trump's tariffs shook global markets, including bitcoin, which fell to $75,000.

More importantly, momentum indicators like the MACD are signaling a clear bullish shift, suggesting the index is poised for continued gains. That calls for caution on the part of bitcoin bulls, as spells of higher expected bond market volatility, as captured by the MOVE index, are known to cause liquidity tightening worldwide.

U.S. Treasury notes are widely regarded as high-quality liquid assets and form a cornerstone of the global collateral pool, helping to reduce credit risk for lenders and facilitating a smooth flow of funds across financial markets.

Thus, heightened volatility in Treasury notes tends to disrupt liquidity, increase borrowing costs and create ripple effects across credit markets and the broader financial system. In such situations, lenders demand higher risk premiums, and market participants pull back from riskier assets, ultimately slowing the flow of funds and adding stress to global markets.

Furthermore, heightened volatility in Treasury notes often prompts bondholders to reduce duration risk by shifting from longer-dated bonds (such as 10- or 30-year Treasury notes) to short-term securities, like two-year notes or Treasury bills.

This "flight to quality" or "flight to safety" usually accompanies a broader market sell-off, as investors reduce exposure to equities, corporate bonds, and other risk assets to preserve capital amid volatility in the Treasury market.

Hence, it's no surprise that historically BTC's price rallies have been characterized by declining trends in the MOVE index and vice versa.

To cut to the chase, the latest bounce in the MOVE index could exacerbate the BTC market's pain, potentially deepening the price pullback.