01/13 - Macro for Humans
Market Overview
Headline
Crypto Consolidates as Markets Seek Direction: Opportunity in the Calm?
Summary
Bitcoin hovers above $90,000 while global markets show mixed signals. The dollar and yields are inching up, creating a complex backdrop for crypto traders.
Mood
The market feels like a coiled spring – tense energy building beneath a calm surface.
What Changed Recently
Bitcoin's short-term momentum is improving, with the 20-day EMA crossing above the 50-day. The dollar is also showing signs of life after weeks of decline.
Comparative Market Analysis
Vs 7 Days Ago
Stocks
The S&P 500 continues its steady climb, now eyeing the $7000 mark. This risk-on sentiment hasn't fully translated to crypto yet, but it's providing a supportive backdrop.
Dollar
The DXY has found its footing, up slightly from last week. This subtle shift is applying some downward pressure on crypto, but hasn't derailed the overall uptrend.
Interest Rates
The 10-year yield is up 10-15 bps, reflecting expectations of higher rates. This is creating a slight headwind for crypto, but hasn't triggered major outflows yet.
Bitcoin Dominance
BTC dominance is largely unchanged, hovering around 59%. The lack of clear direction suggests traders are waiting for a catalyst before rotating between BTC and alts.
Vs 14 Days Ago
Stocks
The S&P 500's steady march higher over the past two weeks reflects growing risk appetite. This should eventually benefit crypto if the trend continues.
Dollar
The dollar's slight recovery from two weeks ago is worth watching. If this develops into a stronger uptrend, it could challenge crypto's recent gains.
Interest Rates
The more pronounced rise in yields over two weeks is a yellow flag for crypto. It hasn't caused major issues yet, but further increases could spark volatility.
Bitcoin Dominance
BTC dominance has been remarkably stable over two weeks. This suggests a balanced market, but also indicates a lack of strong narrative driving money into either BTC or alts specifically.
Crypto Specific Trends
Current State
Bitcoin Vs Alts
It's a stalemate between Bitcoin and alts right now. Money isn't clearly flowing to either camp, suggesting traders are in 'wait and see' mode.
Hot Sectors
DeFi and AI-related tokens are seeing pockets of interest, but there's no dominant sector-wide trend today.
Volume And Activity
Trading volume is below average, indicating low conviction. Many traders appear to be sitting on the sidelines waiting for a clearer signal.
Key Shifts
Week Over Week
The most notable change is Bitcoin's improving short-term momentum, with key moving averages now in a more bullish configuration.
Two Week Trend
Over two weeks, we've seen a gradual shift from clear bullish momentum to more of a consolidation phase across the crypto market.
Notable Reversals
The dollar's recent strength, while subtle, marks a potential reversal of its multi-week downtrend. This bears watching for crypto traders.
What This Means For Traders
If Youre Bullish
- Look for breakouts above $95,000 in Bitcoin as a signal for potential long entries
- Wait for increased volume to confirm any upward moves – low volume breakouts are more likely to fail in this environment
- Consider scaling into positions rather than going all-in, given the mixed signals from global markets
If Youre Bearish
- Watch for a potential double-top formation if Bitcoin fails to break $95,000 convincingly
- Keep an eye on the dollar – further DXY strength could provide opportunities for short-term crypto shorts
- Be prepared to close bearish trades quickly if global risk appetite continues to improve
If Youre Uncertain
- This is an ideal time for range-trading strategies between key support and resistance levels
- Focus on major psychological levels: $90,000 support and $95,000 resistance in Bitcoin
- Watch for a spike in trading volume or a break in the S&P 500's uptrend as potential catalysts for crypto's next big move
Evolving Trading Guidance
What Changed
From 7d Ago
A week ago, momentum trading was more effective. Now, range-trading and breakout strategies are better suited to current conditions.
From 14d Ago
Two weeks ago, simply being long was working well. Now, more nuanced approaches and tighter risk management are necessary.
Current Best Opportunities
Look for high-probability setups at key technical levels. Breakout trades with clear invalidation points offer a good risk-reward in this environment.
Approaches To Avoid
Avoid over-leveraging or taking large positions based on small price movements. The lack of clear direction means false breakouts are more likely.
Timing Considerations
Shorter timeframes (4H and below) offer the best opportunities right now. Be prepared to be more active in managing trades as clear longer-term trends are lacking.
Key Levels To Watch
Critical Thresholds
Bitcoin $95,000 and DXY 99.00 are the two most important levels to watch across markets. Breaks of either could signal the next major move.
Recent Breakouts
The S&P 500 breaking above $6950 last week continues to be significant, showing risk appetite remains strong.
Approaching Tests
Bitcoin is likely to test the $95,000 resistance soon, while the 10-year yield is approaching its recent high of 4.25%.
Final Advice
Main Takeaway
Stay nimble and be prepared for a breakout in either direction. The current calm likely precedes a significant move.
Biggest Change
The subtle shift in dollar strength is the most significant change from two weeks ago. It hasn't dramatically impacted crypto yet, but it's a key variable to watch.
Risk Reminder
In this mixed environment, position sizing is crucial. Don't let the fear of missing out lead to overleveraging – the next big move could be a fake-out before the real trend emerges.