01/20 - Macro for Humans
Market Overview
Headline
Crypto Consolidates as Global Markets Send Mixed Signals
Summary
Bitcoin hovers around $90,000 as stocks climb and the dollar strengthens slightly. Treasury yields are creeping up, suggesting a cautious but not bearish sentiment across markets.
Mood
The market feels like a coiled spring – there's energy building up, but it's not clear which direction it'll snap.
What Changed Recently
Bitcoin's upward momentum has paused, while traditional markets are showing more confidence. The dollar's slight strength is worth keeping an eye on.
Comparative Market Analysis
Vs 7 Days Ago
Stocks
Stocks have gained ground, moving above key moving averages. This improved risk appetite hasn't fully translated to crypto yet, but it could provide support.
Dollar
The dollar has strengthened slightly, which often puts pressure on Bitcoin. However, the effect has been muted so far, suggesting crypto resilience.
Interest Rates
Bond yields are up 15 basis points, indicating expectations of sustained economic strength. This could eventually draw some money from crypto if the trend continues.
Bitcoin Dominance
Bitcoin dominance is largely unchanged, indicating a balanced market without strong rotation between Bitcoin and altcoins.
Vs 14 Days Ago
Stocks
The S&P 500 has maintained its bullish trend, climbing steadily. This improving backdrop for risk assets should theoretically support crypto, but the relationship hasn't been strong lately.
Dollar
The dollar has recovered from lower levels two weeks ago. This gradual strengthening hasn't significantly impacted crypto yet, but it's a headwind to watch.
Interest Rates
The 15 basis point rise in yields over two weeks signals a shift in rate expectations. This could eventually create competition for crypto investments if it continues.
Bitcoin Dominance
Bitcoin dominance has been remarkably stable over the past two weeks, suggesting no major shifts in investor preference between Bitcoin and altcoins.
Crypto Specific Trends
Current State
Bitcoin Vs Alts
It's a stalemate right now. Money isn't strongly favoring Bitcoin or altcoins, as traders seem to be in a 'wait and see' mode.
Hot Sectors
No clear winners today. The consolidation is broad-based across most crypto sectors.
Volume And Activity
Trading volume is decreasing, telling us that conviction is low. Traders are likely waiting for a clearer signal before making big moves.
Key Shifts
Week Over Week
The most notable change is the loss of upward momentum. A week ago, we were riding a wave of optimism. Now, it feels like we're treading water.
Two Week Trend
Over the past 14 days, we've seen a transition from a clear uptrend to this consolidation phase. It's not bearish yet, but the easy gains have paused.
Notable Reversals
The rapid rise in Bitcoin we saw early last week has clearly reversed into this sideways pattern. It's not a full bearish reversal, but it's a significant change in character.
What This Means For Traders
If Youre Bullish
- Look for consolidation patterns like bull flags or ascending triangles forming near the $95,000 resistance
- Wait for a high-volume break above $95,000 before adding to long positions
- Consider tightening stops on existing longs to protect gains from the recent uptrend
If Youre Bearish
- Watch for failed breakout attempts at $95,000 as potential short entries
- Look for bearish divergences on shorter timeframes as we approach resistance
- Be prepared to cover quickly if we see a strong break above $95,000 – this consolidation could resolve upwards
If Youre Uncertain
- Focus on range-trading strategies between $90,000 and $95,000 until a clear breakout occurs
- Pay close attention to the $90,000 support – a break below could signal further downside
- Watch for an increase in volume and volatility as a sign that the consolidation may be ending
Evolving Trading Guidance
What Changed
From 7d Ago
A week ago, momentum trading and breakout plays were working well. Now, patience and range-trading are more appropriate.
From 14d Ago
Two weeks ago, we were in a clear uptrend where buying dips was effective. Now, we need to be more selective and wait for clearer setups.
Current Best Opportunities
Range-trading between key levels and selling volatility (through options strategies) look attractive in this consolidation.
Approaches To Avoid
Avoid aggressive trend-following or breakout strategies until we see higher volume and a clear directional move.
Timing Considerations
Shorter timeframes (1-4 hour charts) may offer the best setups right now. Be prepared to sit on the sidelines more than usual.
Key Levels To Watch
Critical Thresholds
The $95,000 resistance on Bitcoin is the key level to watch. A convincing break above could reignite the uptrend.
Recent Breakouts
The S&P 500 breaking above its 50-day moving average is significant, as it could eventually boost crypto sentiment.
Approaching Tests
Bitcoin is likely to test the $95,000 resistance again soon. How it reacts will be crucial for short-term direction.
Final Advice
Main Takeaway
Stay patient and nimble. This consolidation will eventually lead to a big move – be ready to act when it happens, but don't force trades now.
Biggest Change
The loss of upward momentum in crypto despite improving traditional markets is the most significant shift from two weeks ago.
Risk Reminder
Consolidations can break either way. Don't assume we'll automatically resume the uptrend – protect your gains and be prepared for either outcome.