This is a technical analysis post from Omkar Godbole, CoinDesk analyst and chartered market technician.
For nearly two years, the 10-year US Treasury yield has been stuck in a curious stagnation reminiscent of the pattern seen in bitcoin. until the summer of 2024, just before its record rally to surpass $100,000 began.
At the center of the story is the monthly MACD histogram, a widely followed momentum indicator that has been persistently bearish, pointing to a drop in performance from December 2023.
However, contrary to bearish MACD readings, Fed rate cuts and continued clamor for further easing, the yield has held firm around 4%, the 23.6% Fibonacci retracement of the multi-decade downtrend that ended in 2020-21, trading within an increasingly tight range that traces a contracting triangle.
The divergence highlights an underlying bullish frame in the yield, which reflects the strength of the bond bears (bond prices and yields move in the opposite direction). This setup typically leads to a sudden resumption of bullish trends and a rapid rally, in this case, a tightening of performance.
In support of this theory, the 50-, 100-, and 200-month simple moving averages (SMAs) are stacked in textbook bullish order, one on top of the other, acting as layered floors, indicating that the path of least resistance for performance is on the upper side. This setup last occurred in the 1950s, after which the yield embarked on a nearly three-decade bullish trend.
Furthermore, the Ichimoku cloud, a trend indicator known for filtering out market noise, indicates that performance is well above its limits, confirming a constructive outlook. Again, this is the first time since the 1980s that performance has established a foothold above cloud.
These factors together suggest a higher likelihood of the yield surpassing the 2023 high of 5.02% and potentially rising to 6.25%, which is the 38.2% Fibonacci retracement of the multi-decade downtrend.
A further rally in the benchmark yield, which represents the so-called risk-free rate, could weigh on risk assets, including cryptocurrencies.
Bitcoin-like setup
The divergence between the 10-year US Treasury yield and its persistently bearish MACD resembles a setup we saw on bitcoin’s weekly chart in mid-2024.
Back then, bitcoin was range-bound between $55,000 and $70,000 despite continued negative MACD readings. As CoinDesk highlighted at the time, the price action remained stable within that range amid bearish MACD signals, pointing to underlying market strength. Finally, the MACD crossed above zero again in October, paving the way for a strong and sustained rally that led BTC to surpass $100,000 in the following months.
This pattern illustrates a key principle: technical indicators, like the MACD, can lag price action, and markets often strengthen beneath the surface before breaking out.
