The strong performance of Bitcoin during the current market problems shows analysts that it is becoming an alternative safe place for wealth. Recent signs from the bond market, similar to what happened in March 2020, now endanger Bitcoin’s price stability, which may spark major market volatility.
In times of market instability, Bitcoin remains secure and viable.
The Nasdaq dropped a strong 11 percent last week after Trump announced protectionist tariffs, yet Bitcoin kept its value above $80,000 despite market volatility. Many financial experts now study Bitcoin prices because their movements differ widely from those of normal investment classes.
The S&P 500 has fallen about 5% this trading week because investors expect earnings to suffer from trade policies. Bitcoin successfully maintained its high standing in an interview with 21Shares crypto investment specialist David Hernandez. Bitcoin proved its role as a macroeconomic hedge because it quickly returned to $82,000 after a short crash. Institutional investors may send capital into Bitcoin when markets remain volatile.
The belief in Bitcoin’s stability may create an ongoing pattern that lets it grow as a safe asset, like gold, during financial challenges.
Treasury Basis Trade: A Looming Threat
Market participants should track bond market changes because another financial eruption in 2020 appears imminent, similar to the March events. The Treasury market basis trade runs into major risks because of extreme bond price volatility.
The trade combines leveraged hedge funds that seize price differences between Treasury products. Bonds account for about half of their capital while trading at a risk level 50 times greater than unsecured investments.
According to International Institute of Finance executive Robin Brooks, highly leveraged short-term investors focusing on yield differentials will suffer big losses when financial markets fluctuate sharply in specific market conditions. In March 2020, the US Treasury market crashed, disrupting basis carry trades. Because of the heavy use of leverage, carry trades face high chances of sudden failure.
The Current Conditions Pose Bigger Threats to Investors
The present conditions pose more danger to financial markets than what occurred in 2020. Between March 2025 and now, the basis trade grew to $1 trillion despite the market turmoil compared to the COVID crash in 2020. Market analysts show that $600 million of highly leveraged positions would change value when Treasuries move just one basis point.
The MOVE index increased 12% on Friday to reach 125.70, its highest level since November 2024. Traders’ increased buying and selling indicate increased worry about bond market stability.
Leveraged institutions would need to sell assets across all market sectors in a race for cash, just like the sudden Bitcoin loss on March 12, 2020.
The Brookings Institution urges the Federal Reserve to conduct specific market interventions during crises to help hedge funds maintain their basis trading operations.
When Bitcoin investors see its recent market independence, they must face reality because big crises force asset classes to quickly align, even if Bitcoin seeks to remain a trusted savings option.
