06/12 - Macro for Humans

Market Overview

Headline

Bitcoin Surges Past $108K as Dollar Weakens: A Perfect Storm for Crypto Bulls?

Summary

Bitcoin is riding high above $108,000 as the US dollar shows weakness. Meanwhile, the S&P 500 is in a strong uptrend, creating a favorable environment for risk assets. This combination is setting the stage for potential crypto gains, but traders should remain vigilant.

Mood

The market feels like a party that's just getting started. There's excitement in the air, but also a hint of caution as some wonder how long the good times can last.

What Changed Recently

The most significant shift is the accelerating weakness in the US dollar, which has created even more favorable conditions for Bitcoin and other cryptocurrencies compared to yesterday.

Comparative Market Analysis

Vs 7 Days Ago

Stocks

The S&P 500 has continued its upward march, gaining over 5% in the past two weeks. This risk-on sentiment is spilling over into crypto, making traders more willing to take chances on digital assets.

Dollar

The US dollar has weakened noticeably over the past week, creating a tailwind for Bitcoin. When the dollar loses value, investors often turn to alternative stores of value like cryptocurrencies.

Interest Rates

Bond yields have been creeping up, now at 4.46%. This suggests some inflationary concerns, but hasn't dampened enthusiasm for stocks or crypto yet. Keep an eye on this trend, as sharply rising rates could eventually put pressure on risk assets.

Bitcoin Dominance

Bitcoin's market dominance has increased slightly, showing that as new money enters the crypto space, a good portion is flowing directly into BTC rather than altcoins.

Vs 14 Days Ago

Stocks

The S&P 500's gains have accelerated, with the index up 5.65% over two weeks. This sustained rally has created a much more favorable environment for crypto compared to mid-May.

Dollar

The dollar's decline has become more pronounced over the past two weeks, significantly boosting Bitcoin's appeal as both a hedge and a growth asset.

Interest Rates

While yields have risen, the pace hasn't been alarming enough to derail the current bull run in stocks or crypto. However, this is a key metric to watch as further sharp increases could change the game.

Bitcoin Dominance

Bitcoin's share of the overall crypto market has been gradually increasing over the past two weeks, suggesting a flight to quality within the crypto space.

Crypto Specific Trends

Current State

Bitcoin Vs Alts

Right now, Bitcoin is the star of the show. With its price above $108,000 and dominance rising, it's clear that both new and existing crypto investors are favoring BTC over altcoins.

Hot Sectors

Given the rising yields and inflation concerns, crypto projects focused on decentralized finance (DeFi) and tokenized real-world assets are likely seeing increased interest.

Volume And Activity

Trading volume for Bitcoin is actually decreasing, which is interesting given the price rise. This suggests strong hodler conviction but also hints that we might be due for a short-term pullback or consolidation.

Key Shifts

Week Over Week

The most notable change is the acceleration of Bitcoin's price gains coupled with rising dominance. This suggests the rally is becoming more focused on BTC rather than lifting all boats equally.

Two Week Trend

Over the past 14 days, we've seen a clear shift from a mixed or uncertain market to a decidedly bullish one, led by Bitcoin's strong performance.

Notable Reversals

The dollar's weakness has become much more pronounced over the past two weeks, reversing its previous strength and providing a major boost to Bitcoin.

What This Means For Traders

If Youre Bullish

• Look for pullbacks to the $100,000 support level as potential entry points for long positions
• Wait for a daily close above $110,000 as confirmation before adding to positions
• Consider using trailing stops to protect profits, as the rapid rise might lead to quick corrections

If Youre Bearish

• Focus on short-term trades and be prepared to close positions quickly, as the overall trend remains bullish
• Watch for signs of exhaustion, such as long upper wicks on daily candles or declining volume on price increases
• Consider waiting for a clear break below the 20-day EMA before entering significant short positions

If Youre Uncertain

• Dollar-cost averaging into Bitcoin could be a prudent approach to benefit from the uptrend while managing risk
• Keep a close eye on the $110,000 and $115,000 levels for Bitcoin, as breaks above these could signal continued strength
• Watch the US Dollar Index (DXY) – any signs of it bottoming out could indicate a potential reversal in Bitcoin's fortunes

Evolving Trading Guidance

What Changed

From 7d Ago

A week ago, altcoins were seeing more action. Now, the focus has shifted primarily to Bitcoin, suggesting it's time to be more selective with altcoin trades.

From 14d Ago

Two weeks ago, the market was much more uncertain. Now, we have a clear bullish trend, which means traders can be more confident in swing trading approaches rather than quick in-and-out trades.

Current Best Opportunities

Look for high-quality altcoins that have lagged behind Bitcoin's recent move. They may be primed for catch-up rallies, especially if Bitcoin consolidates at these levels.

Approaches To Avoid

Avoid trying to short Bitcoin or call a top in the current market. The trend is your friend, and right now, that trend is decidedly upward.

Timing Considerations

This is a good environment for swing trades lasting several days to a week. However, be prepared to take profits or tighten stops as we approach the psychologically important $110,000 level for Bitcoin.

Key Levels To Watch

Critical Thresholds

For Bitcoin, $110,000 is the immediate hurdle. A convincing break above this could quickly lead to $115,000. For the S&P 500, watch the $6,100-$6,150 range as potential resistance.

Recent Breakouts

Bitcoin recently broke above the $100,000 level, turning this previous resistance into support. The S&P 500 has broken above its 50-day EMA, confirming the bullish trend.

Approaching Tests

The US Dollar Index is approaching the lower bound of its descending triangle pattern. A break below this could fuel further gains in Bitcoin and other risk assets.

Final Advice

Main Takeaway

The stars are aligning for Bitcoin with a weakening dollar and strong stock market. Stay bullish, but keep your guard up as we approach key resistance levels.

Biggest Change

The most significant shift from two weeks ago is the clear acceleration of dollar weakness, which has turbocharged Bitcoin's rise.

Risk Reminder

While conditions are favorable, remember that markets can turn quickly. Always use stop losses, especially when trading leveraged positions in such a fast-moving market.