A falling US dollar is usually a positive sign for Bitcoin, but some warning signals suggest short-term risks. According to Real Vision crypto analyst Jamie Coutts, while his framework is turning bullish, two key metrics remain a concern, which are Treasury bond volatility and corporate bond spreads.
Dollar Drops to 12-Year Low
In a post on X (Twitter) he described Bitcoin as a “game of chicken” with central banks. He explained that although Bitcoin’s price movements look promising as the dollar drops, rising Treasury volatility and widening corporate bond spreads could impact liquidity and risk assets.
Treasury Volatility and Corporate Bond Spreads Raise Concerns
US Treasury bonds are widely used as global collateral. When their volatility increases, it forces lenders to tighten liquidity, affecting leveraged positions worldwide.
Right now, the MOVE Index—a measure of Treasury bond volatility—is stable but has remained within a certain range since 2022. Coutts noted that if it climbs above 110, central banks might start paying closer attention.
Another factor causing concern is the widening spread in US investment-grade corporate bonds. Over the past three weeks, these spreads have consistently expanded.
This suggests that investor demand for corporate bonds is declining, which could negatively impact broader financial markets, including Bitcoin. Historically, major reversals in corporate bond spreads have coincided with Bitcoin price tops, adding to the uncertainty.
Bitcoin’s Price and the Bigger Picture
Bitcoin is currently in a crucial phase. Coutts previously stated that he did not expect Bitcoin to drop below the high $70,000 range. However, if it falls into the mid-$60,000s, he believes it would indicate a significant fundamental shift.
Despite these risks, he remains cautiously optimistic about Bitcoin’s long-term trajectory. He pointed out several factors that could fuel further growth. These include an ongoing global race among nations to accumulate Bitcoin, either through strategic reserves or mining.
He also expects MicroStrategy to add another 100,000–200,000 BTC this year. Additionally, ETFs could double their Bitcoin holdings, increasing institutional demand.
A High-Stakes Game With Central Banks
Markets are beginning to factor in uncertainty as Treasury volatility and bond spreads rise. If these trends continue, asset prices across the board could face pressure. However, Coutts believes this could also force central banks to take action, which might benefit Bitcoin in the long run.
He compared Bitcoin’s market dynamics to a high-stakes game of chicken with central planners. As liquidity becomes tighter and financial risks increase, Bitcoin holders who remain unleveraged could find themselves in a stronger position.
The key question is whether Bitcoin can withstand short-term volatility and maintain its bullish momentum.
Bitcoin’s Price Actions
At the time of writing, Bitcoin is trading at $82,823.36, down 3.47% in the last 24 hours. The global cryptocurrency market cap stands at $1.64 trillion, while trading volume has surged by an astonishing 194%.
Bitcoin’s future remains a mix of opportunity and risk. While a weaker dollar and institutional interest provide bullish momentum, rising Treasury volatility and widening bond spreads introduce uncertainty.
The coming weeks will be crucial in determining whether Bitcoin can sustain its upward trend or if short-term headwinds will slow its progress.
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