The recent stability of Bitcoin (BTC) in the middle of NASDAQ disorders trained by prices has generated excitation among market players concerning the potential of cryptocurrency as an Actis Paradis. However, Bulls may want to keep an eye on the bond market where the dynamics that characterized the Covid Crash of 2020 could emerge.
The NASDAQ, the Wall Street technological index, known to be positively correlated with Bitcoin, fell 11% since President Donald Trump announced reciprocal prices on 180 nations on Wednesday, degenerating commercial tensions and drawing reprisal reports from China. Other American clues and global markets have also shot alongside net losses in risky currencies such as the Australian dollar and a golden retreat.
The BTC has remained largely stable, continuing to negotiate above $ 80,000, and its resilience is considered to be a sign of its evolution in a macro hedge.
“The S&P 500 is down approximately 5% this week while investors are preparing for trade-oriented trade-focused winds. The specialist in investments at 21Shares, told Coindesk in an email.
The perception of stability could quickly transform into a self-fulfilling prophecy, solidifying the BTC position as a refuge active for the coming years, as the macroscope notes on X.
Basic trade risks of the Treasury
However, a high volatility of short -term drawbacks cannot be excluded, especially since the “base trade in the treasury market” faces risks due to the increased turbulence of bond prices.
Basic trade involves leveraging hedge effects, apparently operating at leverage from 50 to 1, operating minor price differences between term contracts and treasury securities. This trade exploded in mid-March 2020 while the coronavirus threatened to derail the global economy, leading to a “dash for species” which saw investors sell almost all the assets for liquidity in dollars. On March 12, 2020, the BTC dropped by almost 40%.
“When market volatility peaks – as it is now – it finds transportation trades very lever effect vulnerable to major market movements. The explosion on the US treasure market in March 2020, which disrupted the transport trades, is a recent example. The risk of lever for transportation to transport transport is high …”, said Robin Brooks, Director and Chief Economist financing,.
The risk is real because, the size of the basic trade at the end of March was 1 billion of dollars, the double of the count in March 2020. The positioning is such that a base point of a base point in the yields of the treasury (which evolves at prices) would result in a change of $ 600 million in the value of their bets, according to Zerohedge.
Thus, increased volatility in treasury yields could cause a comfortable explosion, leading to a generalized sale of all assets, including bitcoin, to obtain money.
Friday, the travel index, which represents the implicit or expected volatility of 30 days on the US treasury market, jumped from 12% to 125.70, the highest since November 4, according to Data Source TradingView.
The severity of the situation is underlined by a recent document from the Brookings institution, which advises the federal reserve to consider targeted interventions on the US Treasury market, specifically supporting the hedge funds engaged in basic trade during severe market stress.
Let’s see how things take place in the coming week.
