What a week! Bitcoin took off to new highs, venturing into uncharted territory like a modern-day Magellan. Meanwhile, markets came under pressure following the U.S. credit downgrade and a weak bond auction — let’s unpack it.
Macro: Fiscal Reckoning? Treasury Struggles to Find Buyers
Bond vigilantes made a comeback this week. A dismal 20-year Treasury auction — one of the worst since the tenor’s inception in 2020 — sent long-end yields spiking above 5%, just days after Moody’s downgraded the U.S. credit outlook. At the center of it all: Trump’s freshly passed tax bill, expected to significantly widen the deficit. The market’s message was loud and clear: fiscal fantasy has limits. Although yields retreated slightly by week’s end, the damage was done — equities pulled back mid-week before dip buyers stepped in as yields eased.
Japan also faced bond market turbulence, with weak demand for long-end JGBs pushing yields higher. The BOJ, however, signaled it wouldn’t intervene — maintaining a cautious stance.
But what now? Despite the bond market turbulence, equities remain rather resilient. Both the SPX and the NDX are approximately 5% below their ATH. Recent U.S. macro data — including stronger PMIs and the lowest jobless claims in four weeks — suggest the economy isn’t cracking just yet. If the Trump administration can balance fiscal ambition with credibility, there’s still a path forward. No need to panic — at least not yet.
Crypto: Bitcoin – Price Discovery Mode Activated
Despite two high-profile security breaches — a USD223M hack at Cetus Protocol and a massive USD400M privacy incident at Coinbase — markets barely flinched. The response? Up only. BTC smashed through USD111’000 on Pizza Day, surpassing Amazon in market cap.
The ongoing bull run is clearly reflected in the options market, where the far out-of-the-money USD300’000 BTC call expiring on June 27th currently holds the highest open interest on Deribit — even surpassing the USD110’000 and USD120’000 strike. This isn’t just noise — it’s a reflection of structured upside positioning rather than retail-driven hype. BTC’s 7-day ATM IV sits at 46.3%, with firm bullish skew (10D risk reversal +6.43, 25D RR +3.39) reflecting solid call demand. ETH shows higher short-term vol at 75.0%, though its skew has eased slightly (10D RR +1.37, 25D RR +2.82), suggesting a moderation in upside bias.
It’s striking that Bitcoin is breaking all-time highs at a moment when traditional markets are grappling with fiscal uncertainty and bond market stress. Perhaps that’s exactly what makes it shine. Bitcoin can’t be inflated, rewritten, or politically manipulated — its supply is fixed, and its rules are embedded in code. In an increasingly unpredictable world, that kind of stability may be more attractive than ever.
Looking Ahead: Tension, Traction, and the Turning Point
It remains to be seen whether Treasury concerns are just short-term noise or a sign of deeper cracks. Next week, the focus will be on the FOMC minutes, the second estimate of U.S. GDP, and core PCE, along with personal income and spending. As for Bitcoin, the question is whether price discovery has just begun — or if we’re nearing a short breather that could shift attention toward a potential alt season.
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