This is a technical analysis post by CoinDesk analyst and Chartered Market Technician Omkar Godbole.
For nearly two years, the U.S. 10-year Treasury yield has been caught in a curious stalemate reminiscent of the pattern seen in bitcoin through the summer of 2024, just before it began its record rally to over $100,000.
At the centre of the story is the monthly MACD histogram, a widely tracked momentum indicator that has been persistently bearish, pointing to a decline in the yield since December 2023.
Yet, contrary to the bearish MACD readings, Fed rate cuts and constant clamor for more 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 a narrowing range that traces out a contracting triangle.
The divergence highlights an underlying bullish framework in the yield, reflecting the strength of bond bears (bond prices and yields move in the opposite direction). Such a setup typically leads to a sudden resumption of uptrends and a rapid rally, in this case, a hardening of the yield.
Supporting this theory, the 50-, 100-, and 200-month simple moving averages (SMA) are stacked in textbook bullish order one above the other, acting as layered floors, indicating the path of least resistance for the yield is on the higher side. Such a configuration last happened in the 1950s, following which the yield embarked on a near three-decade uptrend.
Furthermore, the Ichimoku cloud, a trend indicator known for filtering out market noise, indicates the yield is well above its bounds, confirming a constructive outlook. Again, this is the first time since the 1980s that the yield has established a foothold above the cloud.
These things taken together suggest a higher probability of the yield breaking above 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 renewed upswing 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 U.S. 10-year Treasury yield and its persistently bearish MACD resembles a setup we saw in bitcoin’s weekly chart in mid-2024.
Back then, bitcoin was range-bound between $55,000 and $70,000 despite ongoing negative MACD readings. As CoinDesk highlighted at the time, the price action held steady within that range amid bearish MACD signals, pointing to underlying market strength. Eventually, the MACD crossed back above zero in October, paving the way for a sharp and sustained rally that carried BTC over $100,000 in the months that followed.
This pattern illustrates a key principle: technical indicators, such as MACD, can lag behind price action, and markets often build strength beneath the surface before breaking out.