Bitcoin continues to hold firmly above the $70,000 threshold, extending its recent gains as global risk assets rallied across equities, commodities, and digital currencies.
Bitcoin marked a near 10% recovery after a jagged week of geopolitical panic. Stocks followed suit, with S&P 500 futures bouncing back to 6,840.
While crypto traders celebrate, the bond market is screaming caution. Is this the calm before a sustained recovery, or is the bond market trying to tell us something that stock and crypto investors are ignoring?
The bond market is betting that the recent oil price spike will make goods more expensive soon. This complicates the Federal Reserve’s situation. Before this week, the market saw an 80% chance of two rate cuts this year. Now? That probability has plummeted to less than 50%.
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Similar to how tariff fears can trigger sudden price drops by altering the inflation outlook, an energy shock forces the Fed to tap the brakes rather than hit the gas. If yields continue to rise toward 4.25% or higher, it could suck the liquidity out of the crypto market, regardless of how bullish the charts look right now.
The week began with a sharp sell-off triggered by spiking crude oil prices, driven by fears of conflict in the Strait of Hormuz. Markets hate uncertainty, and the initial reaction was a classic flight to safety, sending Bitcoin tumbling toward $65,000. However, the market stabilized quickly after the US promised naval escorts for tankers, calming the immediate fear of a supply crunch.
But here is the twist: while stock and crypto prices recovered, the stress didn’t disappear.
The yield on the 10-year US Treasury note has climbed for four consecutive days, jumping from 3.93% to 4.15%. While we have seen how institutions often buy the dip during geopolitical tension, the bond market is signaling that the underlying economic conditions are getting tighter, not looser.
The bullish flipside, however, is that Bitcoin has shown surprising resilience. It is currently acting as a hedge against geopolitical chaos rather than just a risk asset. If the oil situation stabilizes without sparking broader inflation, those Fed rate cut bets could return just as quickly as they vanished.
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Bitcoin is currently trading comfortably above the $70,000 psychological level, but the real test is higher.
The level to watch is $74,000. This was the peak reached on Wednesday during the rebound before sellers stepped back in. If Bitcoin can break and close above $74,000, it would signal that demand is strong enough to ignore the warning signs from the bond market.
