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The U.S. Treasury market is experiencing its highest volatility in four months, potentially jeopardizing an expected bitcoin ( BTC ) price recovery.

U.S. inflation data for February came in softer-than-expected , strengthening the case for Federal Reserve interest-rate cuts. The reading encouraged some analysts to forecast a bitcoin price recovery to $90,000 and higher. It's currently around $82,000.

"With inflation cooling and recession fears still looming but not worsening, Bitcoin could be on the verge of its next major breakout, pushing past the stubborn sub-$90K range," Matt Mena, Crypto Research Strategist at 21Shares , said in an email.

Any upswing, however, could unfold slower than expected as the Merrill Lynch Option Volatility Estimate Index (MOVE), which measures the expected 30-day volatility in the U.S. Treasuries market, has risen to 115, the highest since Nov. 6, according to data source TradingView. It has jumped 38% in three weeks.

Increased volatility in the U.S. Treasury notes, which dominate global collateral, securities and finance, negatively impacts leverage and liquidity in financial markets. That often leads to reduced risk-taking in financial markets.

The MOVE index collapsed following the Nov. 4 election, easing financial conditions that likely aided BTC's surge to as high as $108,000 from $70,000.

The cryptocurrency's rally peaked in December-January as the MOVE bottomed out.