USDTMXN -1054.65% in 1 Year Amid Regulatory and Market Pressures

On SEP 8 2025, the cross-asset pair USDTMXN experienced a significant decline, dropping by 37.37% within 24 hours to reach $18.69. This marked the latest in a series of steep declines, with the pair down 48% in the past week, 21.39% in the last 30 days, and an alarming 1054.65% over the last year. The prolonged and steep correction has raised concerns among investors and market observers about the structural stability of the pairing.

The decline reflects broader market uncertainty and evolving regulatory scrutiny in Mexico and the wider Latin American region. Analysts project that increased regulatory pressure, especially around stablecoin usage and cross-border transactions, has contributed to the sell-off. Additionally, a lack of liquidity in the pairing has exacerbated price volatility, with large moves occurring rapidly in response to market sentiment shifts. The downward trend suggests a growing loss of confidence among institutional and retail participants alike.

Technical indicators have shown a bearish profile for USDTMXN over the past several months. The 200-day moving average has acted as a persistent resistance, while the Relative Strength Index (RSI) has remained in oversold territory, indicating a lack of bullish momentum. Analysts have noted that the RSI has failed to generate any meaningful bullish divergence, suggesting that the asset remains under pressure from bearish forces. Additionally, volume has remained subdued, which signals a lack of conviction in any potential reversal.

Backtest Hypothesis

A backtesting strategy has been proposed to evaluate the potential utility of a short-selling approach during periods of high volatility and declining RSI readings. The strategy is based on key technical signals—specifically, a bearish crossover between the 50-day and 200-day moving averages combined with an RSI reading below 30. The approach would involve entering short positions at confirmed breakout levels while maintaining stop-loss orders to limit exposure to sudden reversals. The hypothesis is that during extended downtrends, such as the one observed in USDTMXN over the last 12 months, the strategy could have captured significant downside movement with limited exposure to counter-trend noise.