Article by Billy Bambrough, Forbes
Compiled by AididiaoJP, Foresight News
Since June of this year, the Bitcoin market has entered a rare sideways consolidation pattern, with prices oscillating within a narrow range and volatility dropping to historic lows. Although market participants widely anticipate a so-called "ultimate catalyst" to break the stalemate, macroeconomic uncertainties are intensifying market anxiety.
Currently, the price of Bitcoin has declined by approximately 50% from its all-time high set in October 2025. Despite recent optimism from Robert Michnik, Head of Digital Assets at BlackRock, who noted a “subtle but clear positive shift” in market sentiment and reiterated the pattern that Bitcoin has ultimately closed each of its five full bull-bear cycles at higher prices, the price has failed to break effectively out of its current range.
Notably, BlackRock’s Bitcoin ETF (IBIT) has accumulated nearly 750,000 BTC, valued at approximately $50 billion, while U.S. spot Bitcoin ETFs recorded a net inflow of over $850 million last week—the strongest weekly performance since mid-April. However, these positive signals have yet to translate into meaningful upward momentum.
The core factor driving market sentiment from "calm" to "tense" lies in two sets of macroeconomic variables that are divergent in direction but simultaneously intensifying.
First, the U.S. fiscal deficit continues to expand, with an $1.8 trillion gap reinforcing market expectations of monetary expansion.
According to the latest data from the U.S. Department of the Treasury, the federal budget deficit reached $432 billion in July alone—the largest monthly shortfall since March 2021—pushing the cumulative deficit for fiscal year 2026 to $1.8 trillion, second only to the extreme peak set during the pandemic in 2020. Total federal debt has now approached $40 trillion.
Under this context, many cryptocurrency asset investors believe that government spending significantly exceeding revenue can only be financed through bond issuance; if the private sector’s capacity to absorb these bonds is limited, it may ultimately force the Federal Reserve to restart balance sheet expansion.
Prominent crypto investor Anthony Pompliano told Fox Business that government fiscal mismanagement will force continuous monetary expansion, and assets such as Bitcoin, gold, real estate, and stocks will benefit over the long term from the depreciation of fiat currencies. He even predicted that Bitcoin’s annual appreciation could average around 30% over the next two decades.
Arthur Hayes, founder of BitMEX, also noted in a recent analysis that the stronger the monetary expansion, the more solid the foundation for a higher valuation floor for Bitcoin, and stated that he is increasing his allocations to Bitcoin, physical gold, and gold mining stocks.
Second, the bond market is sending a completely opposite risk signal.
This week, global bond yields rose sharply, with the U.S. 30-year Treasury yield climbing to its highest level since 2002, the 20-year yield reaching a post-2006 high, and the benchmark 10-year yield hitting its peak since 2007.
Traders generally attribute this round of yield increases to a combination of factors, including persistently widening fiscal deficits, increased financing demand from artificial intelligence infrastructure development, persistently high international oil prices, and uncertainty surrounding monetary policy direction under the new Federal Reserve Chair, Kevin Warsh.
Sean Farrell, Head of Digital Assets Strategy at Fundstrat, noted that Bitcoin’s 30-day realized volatility has fallen into one of its lowest historical ranges. Analyzing the past eight similar periods of extreme low volatility, he found that the median absolute price movement over the subsequent 60 days was 30.2%, with four instances of price increases and four of price declines—indicating that this metric signals the intensity of volatility, not its direction.
Based on the current price of approximately $64,000, a 30% increase could push the price to around $83,200, while an equal 30% decrease could bring it down to approximately $44,800.
Farrell emphasized that Bitcoin’s recent rebound has been driven partly by short covering rather than substantial new capital inflows; since Friday evening, the open interest in Bitcoin-denominated futures has decreased by approximately 8%. He explicitly identified the sustained rise in real bond yields as the key variable that could disrupt the current low-volatility environment.
The Yardeni Research strategy team also stated in the report that, although a panic mechanism has not yet been triggered, they are closely monitoring whether bond market participants will take substantial action. They believe U.S. Treasury yields remain within the typical range of 4% to 5%, but are nearing the upper boundary and require heightened vigilance.
The so-called "Bond Volunteer Army" refers to market forces that sell government bonds to push up yields, thereby pressuring governments or central banks to adjust policies; once they act, overvalued risk assets are typically the first to be hit.
The sustained rise in bond yields has significantly shifted the focus of the crypto market. Currently, traders are paying more attention to the treasury market than to forecasts of the Fed’s short-term interest rate path.
Analysts at the cryptocurrency trading platform Bitunix note that the market’s core concerns are no longer limited to whether the Federal Reserve will raise or cut interest rates, but have shifted toward whether long-term government bond yields will continue their upward trend, whether geopolitical risks will evolve into sustained energy supply shocks, whether inflationary pressures will re-emerge, and whether global risk premiums will widen further.
If the 30-year Treasury yield remains elevated for an extended period, and energy prices rise due to heightened geopolitical tensions, equities, cryptocurrencies, and other high-valued assets may face systemic pressure.
Under this two-sided risk landscape, market participants are gradually preparing mentally for a potential sharp pullback.
Robin Singh, CEO of crypto tax service Koinly, said it is not unimaginable for Bitcoin to experience another sharp decline as the U.S. midterm elections approach, with a price pullback to the $55,000 range being a plausible scenario. He believes that, based on historical patterns, the market often requires a thorough cleansing—a sell-off that forces the last remaining bulls to capitulate—before a cycle bottom can be confirmed.
In summary, on one hand, the monetary expansion narrative driven by massive fiscal deficits provides medium- to long-term upward momentum for Bitcoin; on the other hand, the rising real cost of capital reflected in soaring bond yields is exerting substantial downward pressure on risk assets.
The current Bitcoin market is characterized by "exhausted sellers and cautious buyers," while leveraged capital has already positioned for a rebound, creating significant internal instability. Historical data indicates that the probability of a 30% absolute price movement within the next 60 days has substantially increased; regardless of the eventual direction, market participants must remain highly vigilant and prepare appropriate risk management measures.