“Wave of Liquidations Looms for Bitcoin Bulls as Treasury Basis Trade Fallout Targets $73.8K–$74.4K Range”

Surging Treasury Yields Signal Liquidity Stress, Threaten Bitcoin With Sub-$74K Dip

A spike in U.S. Treasury yields — driven by the rapid unwinding of leveraged bond trades — is rippling through risk markets, intensifying the pressure on cryptocurrencies and raising the odds of Bitcoin (BTC) falling below the critical $74,000 threshold.

The move stems from the unraveling of the popular “basis trade,” a hedge fund strategy that profits from minor price gaps between Treasury futures and actual bonds. This arbitrage tactic has begun to backfire, contributing to a violent rise in yields — nearly 70 basis points on the 10-year Treasury, now at 4.5%, with 30-year yields also nearing the 5% mark.

In normal market conditions, bond yields fall during risk-off periods. But this time, the opposite is happening — and that’s sounding alarm bells.

“We’re seeing signs of stress in the financial plumbing — funding markets, repo, and credit — places you don’t usually hear about unless something’s breaking,” said Justin Low, analyst at ForexLive. “Everything’s going vertical. This is not just about yields — it’s about liquidity.”

The surge in yields comes as the broader market reels. S&P 500 futures dropped 2% Tuesday, reflecting investor anxiety. Bitcoin briefly dipped below $75,000 before recovering slightly to around $76,000, per CoinDesk data.

The MOVE index, Wall Street’s measure of bond market volatility, jumped to 140 — its highest level since late 2023 — signaling heightened turbulence in Treasuries.

Crypto markets, closely tied to broader liquidity trends, are feeling the heat. Data from analytics platform Hyblock Capital indicates that BTC is at risk of dipping into the $73,800–$74,400 range — a key liquidation zone for leveraged long positions on major exchanges.

Liquidations occur when traders’ margin requirements are no longer met, forcing exchanges to automatically close positions. These liquidations often amplify price declines.

“We’ve identified significant long liquidation clusters at $73.8K–$74.4K, $69.8K–$70K, and $66.1K–$67.7K,” Hyblock said in a note. “If BTC falls to $70K, expect another sharp move lower as retail stop-losses and margin levels get swept.”

On the flip side, should sentiment reverse, Hyblock sees zones around $80,900–$81,000, $85,500–$86,700, and $89,500–$92,600 as potential targets for short liquidations, which could accelerate upward momentum.

For now, though, traders are bracing for more pain as forced deleveraging unfolds across both traditional and crypto markets — and a potential liquidity crunch takes center stage.