Macro headwinds test Bitcoin price as $70K crumbles amid US market volatility

Bitcoin (BTC) price continues to compress under $70,000 on Tuesday, and data suggests that the risk of new year-to-date lows remains if bulls fail to turn the level into support.

The whipsaw nature of Bitcoin’s price surged as US market volatility climbed back above a critical level, and Treasury yields saw their sharpest weekly drop in months.

Analysts suggest this macro backdrop may hint at an extended slowdown phase for BTC price, while onchain data shows traders still waiting for a stronger bullish catalyst.

Key takeaways:

The CBOE Volatility Index at 22.50 signals a rising market volatility and risk-off positioning for investors.
The US 10-year yield is at 4.02%, nearing its 200-day moving average trend for the first time since March 2022.

Why Bitcoin may remain a “risk-off” asset for now

The CBOE Volatility Index (VIX), which measures the 30-day volatility expectations in US equities, has climbed to 22.50 in 2026 and is approaching its highest level since November 21, 2025.

A rising VIX typically reflects the growing uncertainty and reduced appetite for risk assets, a “risk-off” setup that has historically pressured Bitcoin.

Coinbase, Cryptocurrencies, Government, Bitcoin Price, Adoption, Markets, United States, Cryptocurrency Exchange, Bonds, Binance, Tether, Price Analysis, Stablecoin, Market Analysis, Yields — *Bitcoin vs. VIX correlation chart. Source:* *Cointelegraph/TradingView*

For context, the chart shows a repeated inverse pattern between Bitcoin and the VIX around the 20 level. When the VIX spiked above 20 in December 2024, BTC formed a top at $104,000. A stronger surge above 25 in March through April 2025 aligned with a sharp BTC correction to $80,000.

Another move above 20 in Q4 aligned with Bitcoin’s cycle high near $126,000, and BTC’s drop below $100,000 also came as the VIX spiked above the threshold.

At the same time, the US 10-year Treasury yield fell by 3.75% last week to 4.05% from 4.28%, its steepest weekly decline since September 2025. Now at 4.02%, the yield is set to retest its 200-period simple moving average (SMA) for the first time since March 2022.

Falling yields reflect defensive positioning across traditional markets, reinforcing the cautious tone.

The Crypto Fear & Greed Index dropped to 7 last week, one of its lowest readings on record. Asset management company Bitwise explained in its weekly newsletter that while extreme fear has aligned with cycle bottoms, BTC’s onchain supply in profit only briefly touched the 50% level during the recent sell-off. This level has marked deeper bear market resets in the past.

Stablecoin liquidity growth slows down

CryptoQuant data shows that the stablecoin reserves increased by $11.4 billion in the 30 days leading up to Nov. 5, 2025, reflecting strong buying power entering the market.

However, as the bearish phase expanded, stablecoin reserves fell by $8.4 billion by Dec. 23, 2025, signaling that capital was moving out.

Over the past month, the reserves across various exchanges have declined by a modest $2 billion. This marked a slowdown compared to the sharp outflows in Q4, but a lack of significant inflows pointed to restrained liquidity conditions.

Binance dominated exchange liquidity, holding $47.5 billion in USDt (USDT) and USDC (USDC) reserves, roughly 65% of total centralized exchange balances, including $42.3 billion in USDt, which is up 36%, year-on-year.

Regarding stablecoin inflows and reserves, crypto analyst Maartunn said USDC inflows to exchanges are trending lower again, indicating that new liquidity has yet to return at scale.