Bitcoin (BTC) is trading above $70,000, rebounding nearly 10% this week as global markets try to stabilize following a geopolitical selloff. But while stocks and cryptocurrencies have established a temporary floor, bond markets are showing that risk-off sentiment remains acute, with Treasury yields rising as investors aggressively reassess their inflation expectations.
The probability of two 25 basis point Fed rate cuts this year has fallen from nearly 80% before the conflict to less than 50%, according to CME Federal Funds Futures.
The energy sector is the catalyst for this divergence. Bond traders are pricing in a “prolonged high” inflation environment as oil prices soar due to Middle East supply chain threats. This had a direct impact on interest rate expectations.
Correlation analysis between assets: 0.55 signal
The yield on the 10-year US Treasury note rose for the fourth day in a row, rising from 3.93% to 4.15%. In bond markets, rising yields correspond to falling prices, often indicating a flight to quality or concerns about entrenched inflation.
This creates a tough environment for zero-yield assets like Bitcoin. As yields on risk-free U.S. Treasuries rise, the opportunity cost of holding volatile digital assets increases. The persistence of high yields suggests that the “risk-on” rally seen in stocks and cryptocurrencies this week may lack structural support. Unless energy prices stabilize quickly, a pessimistic outlook for bond markets will typically have a gravitational pull on risk assets in the medium term.
Bitcoin’s tighter synchronization with traditional risk assets complicates the story of cryptocurrencies as non-correlated hedges during times of geopolitical stress. Analysts monitoring the liquidity situation note that the 30-day correlation between Bitcoin and the S&P 500 has risen to 0.55. This rise in numbers indicates that institutional desks are now primarily treating Bitcoin as a high-beta technology replacement rather than digital gold.
Recent market trends support this statistical association. On Tuesday, as S&P 500 futures fell to a multi-week low of 6,718 points on news of escalating tensions in the Strait of Hormuz, Bitcoin simultaneously fell to about $65,000. The subsequent recovery of the S&P 500 index to 6,840 was mirrored almost instantly by Bitcoin’s rebound to $74,000. This lockstep movement suggests that Bitcoin’s correlation is being driven by the same macro liquidity impulses that currently govern equities.
The Fed is in a trap.
Crude oil is climbing toward $82. Rising inflation.
Stocks are selling. Growth slows.
Interest rates range from 3.5% to 3.75%. There is no room to cut.The next meeting is March 17th. they won’t do anything.
And doing nothing is the worst outcome.
Stagflation is not a theory. Here it is. pic.twitter.com/5oY8m7avBG
— Michael A. Gayed, CFA (@leadlagreport) March 5, 2026
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Bitcoin recovers to $70,000, maintains bullish structure
Bitcoin recovered to $70,000 and maintained its bullish structure. However, major hurdles still remain. The asset is currently trading in a coil within a symmetrical triangle on the daily time frame, and this pattern often precedes significant volatility expansions.
The immediate support floor is located at $65,000, a level it successfully defended during the weekend decline. A confirmed daily close below this threshold invalidates the recovery theory and reveals the next major demand zone between $58,000 and $62,000. This lower bracket coincides with the 200-day moving average.
The upside resistance is heavily built up at $74,000. A return to this level is essential to signal a resumption of the uptrend. Technical indicators such as RSI are currently hovering around 50. Traders need to monitor the volume for breakout attempts. A move above $74,000 without a corresponding spike in volume is likely to signal a bullish trap rather than a sustained rally.
Will Bitcoin history repeat 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 mechanisms. A crypto native since 2017, Daniel leverages his background in on-chain analytics to write evidence-based reports and detailed guides. He holds certifications from The Blockchain Council and is dedicated to providing “information acquisition” that breaks through the market hype and finds real-world blockchain utility.
