Treasury Turbulence Rattles Crypto as Bitcoin Teeters Near Key Liquidation Zone
A sharp repricing in U.S. Treasury markets is creating ripple effects across risk assets, with bitcoin (BTC) approaching a critical support level that could trigger a fresh round of liquidations.
The 10-year Treasury yield has surged by nearly 70 basis points to 4.5% in just a few days, while the 30-year is rapidly approaching the psychological 5% threshold — a level unseen since late 2023. The rise in yields is being linked to the rapid unwinding of the “basis trade,” a popular arbitrage strategy where hedge funds capitalize on pricing inefficiencies between Treasury futures and cash bonds.
According to analysts, the unwinding is putting stress on funding markets, and the spike in yields — rather than indicating confidence in growth — points to potential disorder in the underlying financial plumbing.
“This is beginning to resemble the kind of liquidity squeeze that exacerbated volatility in 2020,” said Justin Low, analyst at ForexLive. “When the back end of the Treasury curve moves this violently, it’s often a sign that systemic players are being forced out of crowded trades.”
In the crypto markets, the implications are immediate. Bitcoin briefly fell below $75,000 on Wednesday before stabilizing near $76,000. However, liquidation risk remains elevated, particularly in the $73,800 to $74,400 range, according to data from Hyblock Capital. If BTC slides into this zone, a significant cluster of leveraged long positions could be wiped out.
Hyblock also highlighted additional long liquidation risk levels at $70,000 and as low as $66,000, suggesting that a deeper flush could be on the table if broader markets remain under pressure.
Conversely, any recovery could trap short positions and ignite upside volatility. Resistance and potential short liquidation zones have been identified at $80,900, $85,500, and up to $92,600.
Equity futures have also turned lower, with the S&P 500 dropping 2%, while the MOVE index — a gauge of Treasury market volatility — has surged to its highest level since October 2023, reflecting the heightened uncertainty.
While bitcoin has historically been touted as a hedge against monetary instability, in practice it continues to behave as a high-beta asset, especially during liquidity crunches.
Until Treasury markets stabilize, crypto investors may need to prepare for more turbulence ahead.
