Bond traders brace for turbulence while bitcoin and stocks remain calm

The divergence comes as government bond yields climb globally. The war in the Middle East has driven oil and diesel prices higher, complicating the inflation outlook and raising questions about how much further central banks may need to tighten policy. The U.S. 10-year Treasury yield briefly hit 5.2% on Thursday before easing to 5.163%.

When MOVE was last around this level in March, the S&P 500 stood near 6,350. It has since risen to 7,704, up roughly 21%. However, bond traders are now paying considerably more for protection against swings in interest rates.

Over a 20-day window, the correlation between VIX and MOVE has slipped to −0.06, turning negative for the first time since April 2024, though that reading is close to zero. The correlation between BVIV and MOVE is more clearly negative at −0.37, one of its lowest readings in years. As bond volatility has risen, bitcoin’s expected volatility has remained near its yearly low.

As CoinDesk reported this week, rising yields alone have shown little consistent relationship with bitcoin’s returns.