The latest strategy report released by the cryptocurrency market analysis agency Matrixport reveals that the current US dollar to Chinese yuan exchange rate (USDCNY) is approaching a key resistance zone, mirroring the market structure during the RMB depreciation cycle in 2015. Historical data shows that although the initial depreciation of the RMB in that year triggered a wave of Bitcoin sell-offs, the price of digital currencies rebounded strongly before the end of the year, recording significant positive gains for the entire year. The analysis team believes that a similar market momentum transition logic may be replaying.
The report points out that the technical pattern of USDCNY has shown signs of a breakout, which highly aligns with the 'suppression - explosion' model of the gold market 18 months ago. It is noteworthy that at that time, institutions' bullish predictions on precious metals were based on similar technical pattern evolution and the resonance of macroeconomic variables. This cross-asset class analysis framework provides a new prism for understanding the potential trends of Bitcoin.
Another variable worth noting is the linkage effect between the U.S. Treasury yield curve and the exchange rate. Although there has been a technical pullback in the U.S. 10-year Treasury yield recently, if there is an unexpected rebound subsequently, it may create short-term pressure on Bitcoin through the exchange rate transmission mechanism. This 'bond market - foreign exchange market - cryptocurrency market' transmission chain has precedent during the pandemic in 2020, when the soaring U.S. Treasury yields directly triggered a liquidity reassessment in the digital currency market.
Technical traders remind us that the breakout of the current USDCNY resistance level requires accompanying trading volume. From historical experience, if a breakout is accompanied by a significant increase in trading volume, risk assets like Bitcoin may welcome a trending market; conversely, it may continue to oscillate within a range. It is worth noting that recent skew indicators in the Bitcoin options market show that investors are hedging against price volatility following an exchange rate breakout.
The report summarizes that the short-term trend of Bitcoin depends on two core drivers: the evolution of exchange rate technical patterns and the direction of U.S. Treasury yields. If USDCNY successfully breaks through and yields remain low, the crypto market may welcome a new round of fund flow-driven market; if yields unexpectedly strengthen, it may delay the pace of the rise. This long-short game pattern provides traders with a time window for bidirectional operations.
