Bond Market Swings Intensify While Bitcoin and Wall Street Stay Quiet

Volatility expectations in the U.S. Treasury market have climbed to their highest level since March, but bitcoin and U.S. stocks have remained relatively calm. Bitcoin’s BVIV and Wall Street’s VIX are both still near their year-to-date lows, underscoring the growing gap between bond-market stress and risk assets.

The MOVE index, which measures expected volatility in U.S. Treasury securities, rose from around 80 on Tuesday to 104 on Thursday. CoinDesk data shows this was its highest level since March, when the index reached 199.

Bitcoin options markets have yet to reflect the increase in bond volatility. Volmex’s annualized 30-day Bitcoin Implied Volatility Index, known as BVIV, was around 37, close to its year-to-date low of 35. The measure captures the volatility options traders expect bitcoin to experience over the next four weeks.

The Cboe VIX, which tracks expected volatility for the S&P 500, was also hovering near its year-to-date low of 14. Neither bitcoin nor U.S. equities has seen the same increase in demand for volatility protection that has emerged in Treasury markets.

The divergence comes as bond-market conditions become more unsettled. Treasury securities underpin much of the global financial system and credit markets, so a sustained increase in bond volatility can tighten financial conditions and potentially reduce appetite for riskier assets.

Global Bond Yields Move Higher

The rise in Treasury volatility coincides with higher government bond yields around the world. The war in the Middle East has lifted oil and diesel prices, complicating the inflation outlook and raising questions about how much additional monetary tightening central banks may need.

The U.S. 10-year Treasury yield briefly reached 5.2% on Thursday before falling back to 5.163%.

When the MOVE index was at a comparable level in March, the S&P 500 was near 6,350. It has since climbed to 7,704, a gain of roughly 21%. Bond investors, however, are now paying considerably more to hedge against potential interest-rate fluctuations.

The relationship between Treasury and equity volatility has weakened as well. Over a 20-day period, the correlation between MOVE and the VIX fell to −0.06, turning negative for the first time since April 2024, although the reading remains close to zero.

The correlation between BVIV and MOVE is stronger in the opposite direction, at −0.37, one of its lowest readings in years. In effect, bitcoin’s expected volatility has remained near its annual low while Treasury volatility has accelerated.

As CoinDesk reported earlier this week, increases in Treasury yields alone have not demonstrated a consistent relationship with bitcoin returns, highlighting the lack of a straightforward link between bond-market moves and BTC performance.