SKN | Bitcoin Bull Case Strengthens as U.S. Bond Volatility Hits Lowest Level Since 2021

Key Points:
U.S. Treasury bond volatility has fallen to its calmest level in more than three years, easing financial conditions.
Bitcoin has historically benefited from falling bond volatility as risk appetite improves.
The macro backdrop strengthens the case for a renewed push toward six-figure bitcoin prices.

Bitcoin’s early-2026 rally is gaining credibility from an unlikely but powerful source: the U.S. bond market. As volatility in Treasuries sinks to levels last seen in 2021, macro conditions that typically support risk assets are quietly aligning in bitcoin’s favor.

Bitcoin is trading near $96,000, up roughly 10% since the start of the year, as investors reassess liquidity, risk, and capital allocation across global markets. While headlines have focused on ETFs and geopolitics, analysts say the calmer bond market may be one of the most underappreciated drivers behind the improving outlook.

Bond Market Calm Signals Easier Financial Conditions

At the center of this shift is the ICE BofA MOVE Index, the benchmark measure of expected volatility in U.S. Treasury bonds. The index has dropped to around 58, its lowest reading since October 2021, extending a steady decline that began last spring.

Treasuries form the backbone of the global financial system. They are used as collateral across lending markets, derivatives, and institutional balance sheets. When Treasury prices swing sharply, credit tightens, leverage becomes more expensive, and investors typically retreat from higher-risk assets.

When volatility subsides, the opposite tends to occur. Stable bond markets lower funding stress, encourage credit creation, and make it easier for capital to move into equities and alternative assets. Historically, that environment has been supportive for bitcoin.

Bitcoin’s Relationship With Volatility and Tech Stocks

Despite its “digital gold” branding, bitcoin has behaved more like a liquidity-sensitive asset over most of its history. Its price has often moved in tandem with growth assets, particularly the Nasdaq 100, while showing an inverse relationship with the MOVE index.

That dynamic was evident during the 2022 downturn, when surging bond volatility coincided with bitcoin’s steep decline. It resurfaced during the recovery that began in 2023 as volatility eased and financial conditions stabilized. The current compression in bond volatility echoes those earlier setups.

From a strategic standpoint, declining volatility tends to shift investor behavior. When macro stress fades, portfolio managers become more willing to express directional views and increase exposure to assets with higher upside potential. Bitcoin increasingly sits in that category.

Reinforcing Factors Beyond the Bond Market

The calmer Treasury backdrop is not acting in isolation. U.S. spot bitcoin ETFs have seen renewed inflows, providing a structural bid that did not exist in previous cycles. At the same time, fears of aggressive rate hikes have faded, even as policymakers remain cautious about easing too quickly.

Psychologically, the combination of improving liquidity and reduced volatility often rebuilds confidence after prolonged consolidation. Bitcoin’s ability to hold recent gains while volatility elsewhere declines reinforces the perception that downside risks are becoming more manageable.

Risks Still Linger as Markets Reprice

The bullish setup is not without vulnerabilities. A renewed surge in geopolitical tensions or an unexpected spike in inflation could quickly reverse the decline in bond volatility. Regulatory uncertainty, particularly delays around U.S. crypto market structure legislation, also remains a potential source of market friction.

No single indicator guarantees higher prices, and bond volatility is best viewed as a supportive condition rather than a trigger. Markets can reprice abruptly if macro assumptions shift.

Still, with the bond market signaling stability rather than stress, bitcoin enters the next phase of 2026 with a macro tailwind that has been largely absent in recent years. If low volatility persists and liquidity continues to improve, the probability of bitcoin reclaiming — and holding — six-figure levels continues to rise.