This is a technical analysis article from Omkar Godbole, CoinDesk Analyst and Certified Market Technician.
For almost two years, the 10-year US Treasury yield has been in a curious impasse reminiscent of the trend observed for Bitcoin. until the summer of 2024, just before it begins its record rally to over $100,000.
At the center of the story is the monthly MACD histogram, a widely followed momentum indicator that has been consistently bearish, pointing toward a decline in yield since December 2023.
Yet, contrary to bearish MACD numbers, Fed rate cuts, and constant demands for further easing, the yield has remained firm around 4%, the 23.6% Fibonacci retracement of the multi-decade downtrend that ended in 2020-2021, trading in a narrowing range that draws a contraction triangle.
The divergence highlights an underlying bullish framework in the yield, reflecting the strength of bond declines (bond prices and yields move in the opposite direction). Such a pattern usually leads to a sudden resumption of uptrends and a rapid rally, in this case, yield hardening.
In support of this theory, the 50-, 100-, and 200-month simple moving averages (SMA) are stacked in a classic bullish order on top of each other, acting like layered floors, indicating that the path of least resistance for yield is on the higher side. Such a pattern last occurred in the 1950s, after which the yield embarked on a nearly three-decade upward trend.
Additionally, the Ichimoku cloud, a trend indicator known for filtering out market noise, indicates that the yield is well above its limits, confirming a constructive outlook. Once again, this is the first time since the 1980s that the yield has gained a foothold above the cloud.
These elements taken together suggest a higher probability that the yield exceeds the 2023 high of 5.02% and could reach 6.25%, which corresponds to the 38.2% Fibonacci retracement of the multi-decade downtrend.
A further rise in the benchmark yield, which represents the so-called risk-free rate, could weigh on risky assets, including cryptocurrencies.
Bitcoin-like setup
The divergence between the 10-year US Treasury yield and its consistently bearish MACD resembles a pattern we saw on Bitcoin’s weekly chart in mid-2024.
At the time, bitcoin was in a range between $55,000 and $70,000 despite ongoing negative MACD readings. As CoinDesk pointed out at the time, price action has remained stable within this range amid bearish MACD signals, indicating underlying market strength. Eventually, the MACD rose back above zero in October, setting the stage for a sharp and sustained rally that took BTC over $100,000 in the months that followed.
This trend illustrates a key principle: technical indicators, such as the MACD, can lag behind price action, and markets often strengthen beneath the surface before breaking out.
