This is not the first time we incorporate the Chinese bond yields element (CN02Y\/CN20Y) to Bitcoin (BTCUSD) analysis, but it is the first time we do so in such an illustrative way by displaying all Cycles from a common starting point. We have made a case in the past how strong of a correlation the Chinese bond market has with Bitcoin and how efficiently that can predict its Cycles.<\/p>\n
As you see on the chart, each Cycle portrays a certain period: Red = Cycle 1 -2 (2010 – 2014), Blue = Cycle 2 – 3 (2015 – 2018) and Orange = Cycle 3 – 4 (2019 – now). The CN02Y\/CN20Y ratio is displayed in Grey. A key characteristic is that all Cycles have a common start, the bottom of the previous one. We see the effect of diminishing returns as each Cycle is less aggressive (naturally) from the previous one.<\/p>\n
We also see the strong connection with CN02Y\/CN20Y, as when the ratio starts declining, BTC enters a Bear Cycle, and once the ratio starts rising, BTC initiates a Bull Cycle. Right now it appears that we are at the point where the CN02Y\/CN20Y ratio typically peaks and consolidates, which for BTC is translated to the time it breaks above its 1W MA50 and practically starts a new aggressive rally, the first of the new Bull Cycle.<\/p>\n
Based on this model, Bitcoin should extend the rally it started this year. Do you agree? Feel free to let us know in the comments section below!<\/p>\n
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