Bitcoin (BTC) is trading above $70,000, recovering almost 10% this week as global markets attempt to stabilize after a sharp geopolitical sell-off. However, while stocks and cryptocurrencies have established a temporary bottom, the bond market is signaling that risk-averse sentiment remains acute, with Treasury yields rising as investors aggressively reassess inflation expectations.
According to CME federal funds futures, the probability of two 25 basis point Fed rate cuts this year has collapsed to less than 50%, down from nearly 80% before the conflict.
The catalyst for this divergence is the energy sector. As oil prices climb due to threats to supply chains in the Middle East, bond traders are pricing in a “higher and longer” inflationary environment. This had a direct impact on interest rate expectations.
Correlation analysis between assets: the 0.55 signal
The yield on the 10-year U.S. Treasury note rose for four straight days, from 3.93% to 4.15%. In bond markets, rising yields correspond to falling prices and often signal a flight to quality or fear of stubborn inflation.
This creates a hostile environment for zero-yielding assets like Bitcoin. When risk-free Treasury yields rise, the opportunity cost of holding volatile digital assets increases. The persistence of high yields suggests that the “risk-on” rally seen this week in stocks and cryptocurrencies may lack structural support. Unless energy prices stabilize quickly, the bond market’s pessimistic outlook typically exerts a gravitational pull on risky assets over the medium term.
Synchronization between Bitcoin and traditional risk assets has tightened, complicating the narrative of crypto as an uncorrelated hedge during times of geopolitical stress. Analysts monitoring liquidity conditions note that the 30-day correlation between Bitcoin and the S&P 500 has climbed to 0.55. This high reading indicates that institutional offices currently treat Bitcoin largely as a high-beta technology proxy rather than digital gold.
Recent market developments confirm this statistical link. As S&P 500 futures fell to a multi-week low of 6,718 points on Tuesday following news of escalating tensions in the Strait of Hormuz, Bitcoin simultaneously fell to around $65,000. The S&P 500’s subsequent recovery to 6,840 was mirrored almost instantly by Bitcoin’s rebound towards $74,000. This gradual movement suggests that the Bitcoin correlation is currently driven by the same macro-liquidity impulses that govern stocks.
The Fed is trapped.
Oil is trending towards $82. Inflation is increasing.
Stocks are selling. Slowdown in growth.
Rate at 3.5-3.75%. No space to cut.Next meeting on March 17. They won’t do anything.
And doing nothing is the worst possible outcome.
Stagflation is not a theory. It’s here. pic.twitter.com/5oY8m7avBG
– Michael A. Gayed, CFA (@leadlagreport) March 5, 2026
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Bitcoin recovery to $70,000 preserves bullish structure
Bitcoin’s recovery to $70,000 preserved the bullish structure. But significant obstacles remain. The asset is currently trading within a symmetrical triangle on a daily time frame, a trend that often precedes a major expansion in volatility.
The immediate support floor lies at $65,000, a level that was successfully defended during the weekend sell-off. A confirmed daily close below this threshold would invalidate the recovery thesis and expose the next major demand area between $58,000 and $62,000. This lower bracket aligns with the 200-day moving average.
On the upside, resistance lies strongly at $74,000. Reclaiming this level is essential to signal a resumption of the uptrend. Technical indicators like the RSI are currently hovering around 50. Traders should monitor volume during any breakout attempts. A move above $74,000 without a corresponding volume spike would likely signal a bull trap rather than a sustainable rally.
Is Bitcoin history repeating itself? pic.twitter.com/UTXUHLNmCj
– Crypto Rover (@cryptorover) March 6, 2026
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Daniel Frances is a technical writer and Web3 educator specializing in macroeconomics and DeFi mechanics. Hailing from crypto since 2017, Daniel leverages his experience in on-chain analytics to write evidence-based reports and in-depth guides. He holds certifications from the Blockchain Council and is dedicated to providing “insight gain” that overcomes market hype to find real utility for blockchain.
