This indicator is currently supporting bullish sentiment for Bitcoin and the Nasdaq

Some observers believe the relief may be temporary.

Posted by Omkar Godbole Updated March 21, 2025 20:36 UTC Published March 21, 2025 12:10 UTC

Key points:

• The adjusted spread (OAS) on the ICE/BofA US High Yield Bond Index option, an important indicator of economic sentiment and corporate credit health, has declined from recent highs, helping to restore risk appetite in cryptocurrency and equity markets.
• The OAS index, which measures the difference in yield between high-yield corporate bonds and U.S. Treasuries, fell to 3.2% from a six-month peak of 3.4%.
• However, analysts predict that the OAS spread could widen in the coming weeks as the negative impact of Trump's tariffs becomes more apparent.

A key indicator of economic sentiment and corporate credit health has pulled back from its recent multi-month highs, a positive sign for risk-taking in stock and crypto markets. However, some experts say the relief may be temporary.

The indicator under study is the ICE/BofA US High Yield Index Option Adjusted Spread (OAS), which measures the average yield difference between US dollar-denominated high yield corporate bonds and Treasuries, adjusted for embedded bond optionality.

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The indicator is widely used as a barometer of credit risk, as a widening spread indicates growing investor concerns about corporate defaults or economic instability, which often leads to a decline in interest in riskier assets such as technology stocks and cryptocurrencies.

The OAS, which reflects demand for high-yield bonds over relatively safer Treasuries, fell to 3.2% from a six-month high of 3.4% earlier this month.

The spread's decline supports the resumption of growth in Bitcoin (BTC) and Nasdaq.

The spread widened by 100 basis points in the four weeks to mid-March as President Donald Trump's tariffs fueled recession fears. During that time, both BTC and the Nasdaq suffered losses, with the cryptocurrency falling to levels below $80,000.

Temporary relief?

Analysts expect the OAS spread to widen further in the coming weeks as the negative impact of Trump's tariffs becomes more apparent, according to Mint and Reuters.

“We believe this is just the beginning and things could get worse before they get better,” Hans Mikkelsen, managing director of credit strategy at TD Securities, said in a recent client note.