Head-and-Shoulders: BTC and S&P 500 Point to Bearish Reversal

Bearish Signals: Bitcoin and S&P 500 Face Market Headwinds
Treasury Yields Soar, Crypto Market Feels the Heat
MOVE Index Spikes: A Warning Sign for Bitcoin and Stocks
Risk Assets Struggle as Treasury Volatility Rattles Markets
BTC Falls Below $97K as Bond Market Drives Sentiment Shift
From Bullish to Bearish: Bitcoin and S&P 500 Lose Momentum

The crypto market’s fast-paced nature is evident in how quickly sentiment turned bearish within just 24 hours.

Bitcoin (BTC) and the S&P 500 are forming a head-and-shoulders topping pattern, signaling potential bearish reversals. This aligns with a shift in market dynamics that fueled the post-election rally in both assets.

Key to this shift is the MOVE Index (Merrill Lynch Option Volatility Estimate), which measures 30-day volatility in the U.S. Treasury bond market. As volatility in the bond market increases, financial conditions tighten, leading to risk aversion across markets.

The MOVE index, which hit a low of 82 in mid-December, rose to 102.78 on Tuesday after stronger-than-expected manufacturing data highlighted a robust economy and persistent inflation. This, in turn, pushed Treasury yields higher, with the 30-year yield reaching 4.92% and the 10-year yield climbing to 4.68%.

In response:

Bitcoin fell 5% to $96,900.
The S&P 500 dropped over 1%.
Both assets began losing upward momentum in mid-December, coinciding with the MOVE index’s rebound.
The collapse of the MOVE index after Donald Trump’s election victory on Nov. 5 had eased financial conditions, boosting risk assets. However, its recent rise is reversing this effect.

Key Takeaway:
Bonds are dictating the broader market narrative. For a bullish recovery in risk assets like Bitcoin and the S&P 500, stability in the Treasury market is crucial.

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