quantmaven

Yield Curve: The ultimate predictor of crypto moves

The yield curve, defined as the difference between US 10-year treasuries yield and US 2-year treasuries yield, is an excellent predictor of the next intraday moves in the crypto market. If it is going higher, it means that long rates are increasing faster than short rates and that translates to strong economic activity and higher inflation. Crypto markets love inflation because they serve a hedge against it. Observe the chart, it appears to be a leading indicator on the future direction of crypto prices. Today it really as the case, the yield curve steepened alot (see green vertical line), which was THE signal to buy. You had about 1 hour to load up before the crypto market reacted. Sometimes the indicator has a long lead, sometimes it has a shorter lead and sometimes it may appear even coincident. Now the indicator is not giving any signal, but I just want to show you how great the signal was this morning and the previous weeks!
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