Bond volatility surges while bitcoin and Wall Street stay calm
U.S. Treasury market volatility has spiked significantly, while Bitcoin and the S&P 500 remain relatively calm. This divergence suggests that despite rising bond yields and geopolitical tensions, risk assets are currently maintaining stability.
Why it matters
The decoupling of bond market volatility from equity and crypto markets provides insight into investor sentiment and the potential impact of global interest rate trends.
The MOVE index, which measures expected volatility in the U.S. Treasury market, has jumped from around 80 on Tuesday to 104 on Thursday, its highest level since March when it hit 199, according to data source CoinDesk.
Volmex’s annualized 30-day bitcoin implied volatility index, BVIV, is subdued at around 37, close to its year-to-date low of 35. The index reflects bitcoin options traders’ expectations for price volatility over four weeks. Meanwhile, the Cboe VIX, which tracks expected volatility in the S&P 500, is hovering close to its year-to-date low of 14. Neither market is showing the same demand for volatility.
The divergence points to underlying strength in bitcoin and stocks. Higher volatility in Treasury notes, which underpin global finance and credit creation, typically tightens financial conditions and disincentivizes risk-taking in financial markets.
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