The worst fears for risk assets, including cryptocurrencies, are coming true, and that has raised the risk of bitcoin (BTC) falling below $74,000 in a move that could shake out leveraged long bets.

On Sunday, CoinDesk discussed the possibility of pronounced downside volatility in risk assets due to a potential unwinding of the Treasury market arbitrage bets, a dynamic that catalyzed the 2020 crash.

Per observers, the unwinding of the so-called carry trades, involving hedge funds exploiting minor price discrepancies between Treasury futures and securities, has begun. That’s evident from the nearly 70 basis points rise in the U.S. 10-year Treasury yield to 4.5%. The 30-year yield has seen a similar rise. Note that yields move in the opposite direction of prices and typically drop during risk aversion as investors seek refuge in government bonds.

«It’s all running vertical now with 30-year Treasury yields on the cusp of hitting the 5% mark. For some context, 10-year yields in the US were at a low of 3.88% on Monday. This points to further liquidation in Treasuries and that’s a sign that we are seeing distress in the parts of the market that we should not normally talk about i.e. funding, credit, repo,» ForexLive’s analyst Justin Low said in a market update discussing the implosion of the basis trade.

Low added that it’s «all going sideways at the moment» as a sharp rise in yields itself can have a far-reaching impact on markets, housing and the economy.

Stocks drop, BTC under pressure

Futures tied to the S&P 500, Wall Street’s benchmark equity index, fell 2% amid increased volatility in the Treasury market. Bitcoin fell briefly below $75,000 early today and has since recovered to trade near $76,000, CoinDesk data showed.

The MOVE index, which represents the options-implied 30-day price turbulence in the Treasury market, jumped to 140, the highest since October 2023, according to data source TradingView.

The worsening of the risk sentiment has raised the risk of BTC falling to the $73.8K-$74.4K range, where holders of bullish long positions in the perpetual futures listed on major exchanges face liquidation risks, according to data tracked by analytics firm Hyblock Capital.

Liquidation represents the forced closure of positions by exchanges due to margin shortages. Large long liquidations often add to downside price volatility.

«We see long liquidation clusters (where we estimate liquidations to get triggered) at 73800-74400, 69800-70000, 66100-67700. In particular, if we hit 70k, we likely go down at least $200 more, taking the retail stop losses right below 70k and the liquidation levels liquidity,» Hyblock told CoinDesk.

On the higher side, Hyblock identified $80,900-$81,000, $85,500-$86,700, and $89,500-$92,600 as prominent zones for potential short liquidations.

Bitcoin (BTC) dipped to nearly $75,000 early Wednesday, before slightly recovering, as Trump’s sweeping global tariffs went into effect.

Ether (ETH) dived 10%, leading losses among major tokens, with xrp (XRP), dogecoin (DOGE), BNB Chain’s BNB, Solana’s SOL and Cardano’s ADA down more than 5%. Overall market capitalization decreased 6%, extending a 7-day slide to nearly 15%.

Smaller tokens showed even deeper losses, with trendy upstart Berachain’s BERA down 20% and memecoins bonk (BONK), pepe (PEPE) and floki (FLOKI) down more than 9%.

Traders’ retreat from crypto majors continued, reversing all gains from Tuesday’s relief rally as Trump pushes forward efforts to drastically reorder global trade. Tariffs on any Chinese goods were hiked to 104%, along with import taxes on over 60 trading partners.

U.S. treasuries extended their selloff, with 30-year yields soaring more than 20 basis points to 4.98%. That’s a U-turn from the usual safe haven status that bond investors enjoy and a deeply worrying sign for traders.

Some market watchers speculated the sell-off may have been caused by a forced liquidation of a large player.

«Since Friday’s close to now the 30-year yield is up 56 bps, in three trading days,» Jim Bianco, the well-followed founder of Bianco Research, said in an X post. «The last time this yield rose this much in 3 days (close to close) was January 7, 1982, when the yield was 14%.»

«This kind of historic move is caused by a forced liquidation, not human managers make decisions about the outlook for rates at midnight ET,» he added.

Rising yields mean bond prices are falling and increase the cost of borrowing for the U.S. government, which could exacerbate the federal deficit, already strained by heavy debt levels.

Investors worry that a prolonged trade war could weaken global trade, disrupt supply chains, and slow U.S. economic growth. This could further pressure U.S equity markets and bitcoin, which tends to mirror the ebbs and flows of U.S. markets.

The current selloff suggests the market is pricing in inflation now, but prolonged uncertainty could flip this dynamic.

Bears take charge

Meanwhile, some traders are eyeing a bitcoin drop to as low as $70,000 in the near term amid the tariff escalations, a move that could further pressure crypto majors.

“For investors, the short-term outlook calls for caution, while a further drop to $70,000–$75,000 for Bitcoin is possible if trade tensions escalate, yet this dip presents a buying opportunity for the long haul,” Ryan Lee, Chief Analyst at Bitget Research, told CoinDesk in a Telegram message.

“Dollar-cost averaging into Bitcoin is a prudent move now, with an eye on altcoins like Solana for higher-risk upside later.” Lee remained upbeat for recovery to peak prices if the situation lightens in the coming months.

“If macro conditions stabilize or pro-crypto policies emerge, we could see Bitcoin hit $95,000–$100,000 by late 2025, lifting the market cap past $3 trillion again. While tariff pressures and a risk-off sentiment have hit altcoins hard, Bitcoin’s resilience and rising dominance near 60% suggest the ecosystem’s fundamentals remain solid, supported by institutional adoption and long-term tailwinds like the halving cycle,” he added.

Bitcoin investors may not exactly feel it, but BTC has been a relatively good bet since President Trump’s tariff plans last week resulted in historic losses in traditional markets. While stocks and other mainstream investments have been falling off a cliff since the “Liberation Day” announcement April 2, bitcoin has remained relatively steady losing “only” 8% of its value.

“I think this is the most bullish 8% drawdown I’ve ever seen in bitcoin,” said Zach Pandl, head of research at Grayscale, a leading crypto investment manager.

Based on historical data, you would expect bitcoin to have three times the volatility of the Nasdaq, Pandl said. And yet while the Nasdaq was down 15% at the beginning of trading April 8 (compared to April 2), bitcoin was nowhere near 45% down.

In other words, an 8% decline is a positive as historical patterns predicted a far steeper tumble.

“I think crypto investors should be extremely pleased with the modest pullback in bitcoin,” Pandl, a former analyst at Goldman Sachs, told CoinDesk.

“It reflects that tariffs — while they are a short term risk-off event for markets — are probably to be something that’s supportive for bitcoin adoption in the longer run. I think the relatively moderate drawdown reflects that,” he added.

Pandl is bullish on bitcoin in an environment where the dollar is potentially losing its place as a global reserve currency.

“Stagflation is going to be negative for stocks and bonds, and, historically, that has been positive for scarce commodities. Investors who are concerned by stagflation are looking for alternative assets that can drive returns. In traditional markets that might be gold or copper, and bitcoin,” he said.

Pandl says bitcoin’s relatively good performance reflects a rotation away from large-cap tech stocks towards commodity assets like bitcoin. You can see this in the performance of bitcoin against Roundhill “Magnificent 7 ETF.” You can now buy more of that ETF with one bitcoin compared to a week ago.

To those who subscribe to Bitcoin’s long-term investment thesis as a safe haven in uncertain times, the last few days have been a test case where bitcoin is winning. In theory, say these advocates, bitcoin should benefit as investors seek alternatives to dollars in times of stress.

“If you believe that the erosion of the dollar’s position is part of the bitcoin thesis, then your conviction in that thesis in the last week should have gone up,” Pandl says.

He expects bitcoin’s price to rise in the medium-term, reaching new all-time-highs this year.

“The price of bitcoin is down but conviction is up and there’s no need to change the medium term price outlook,” he said.