06/22 - Macro for Humans

Market Overview

Headline

Dollar Dips, Bitcoin Wobbles: A Shifting Landscape for Crypto Traders

Summary

The US dollar is weakening, creating a mixed bag for crypto. Bitcoin is showing short-term weakness but remains in a long-term uptrend. Meanwhile, the stock market is holding steady near all-time highs, creating an interesting backdrop for risk assets.

Mood

Cautiously optimistic, with a sense that we're at a potential inflection point

What Changed Recently

The dollar's decline has accelerated, potentially setting up for a bounce. Bitcoin has dipped below its 20-day moving average, signaling short-term weakness.

Comparative Market Analysis

Vs 7 Days Ago

Stocks

The S&P 500 is largely unchanged, hovering just below 6000. This stability in traditional markets provides a neutral backdrop for crypto, neither fueling a risk-on rally nor sparking a flight to safety.

Dollar

The dollar has weakened significantly over the past week. This typically supports crypto prices, but Bitcoin's failure to capitalize on this suggests other factors are at play.

Interest Rates

The 10-year yield has dipped slightly, indicating a marginal increase in risk appetite. This should provide a supportive environment for crypto, but the effect has been muted so far.

Bitcoin Dominance

Bitcoin dominance is unchanged over 7 days, suggesting a balanced flow between Bitcoin and altcoins. This stability indicates no major rotations within the crypto market recently.

Vs 14 Days Ago

Stocks

The S&P 500 remains in a strong uptrend, having consolidated recent gains. This ongoing strength in equities creates a generally favorable environment for risk assets like crypto.

Dollar

The dollar's decline is even more pronounced over two weeks. This persistent weakness typically correlates with strength in crypto, making Bitcoin's current pullback somewhat surprising.

Interest Rates

Bond yields have been range-bound, suggesting stable expectations for interest rates. This neutral stance removes some uncertainty for crypto markets but doesn't provide a strong directional cue.

Bitcoin Dominance

Bitcoin dominance has crept up 1% over two weeks, indicating a slow but steady flow back into Bitcoin from altcoins. This suggests a slightly more cautious sentiment developing in the crypto market.

Crypto Specific Trends

Current State

Bitcoin Vs Alts

Money is cautiously favoring Bitcoin over altcoins, likely due to increased market uncertainty. It's like investors are taking one step back towards the 'safer' option in the crypto space.

Hot Sectors

With Bitcoin dominance rising, we're not seeing standout performance in specific altcoin sectors. The market seems to be in a 'wait and see' mode.

Volume And Activity

Trading volume is below average and decreasing, suggesting a lack of conviction from both buyers and sellers. It's as if the market is holding its breath, waiting for a catalyst.

Key Shifts

Week Over Week

The most notable change is Bitcoin's failure to capitalize on dollar weakness. This divergence from typical behavior suggests either a temporary anomaly or potentially shifting market dynamics.

Two Week Trend

We're seeing a slow but steady increase in Bitcoin dominance, pointing to a gradual shift towards a more conservative stance within the crypto market.

Notable Reversals

Bitcoin's drop below the 20-day EMA is a significant short-term bearish signal, contrasting with its longer-term bullish trend. This creates a conflicting narrative for traders to navigate.

What This Means For Traders

If Youre Bullish

• Look for Bitcoin to find support around the psychologically important $100,000 level
• Wait for a clear bounce and close above the 20-day EMA before entering new long positions
• Consider scaling into positions rather than going all-in, given the mixed signals

If Youre Bearish

• Short-term traders might look at potential shorts if Bitcoin breaks below $100,000 with volume
• Watch for a potential bounce at $98,000, which could offer a better entry for shorts
• Be prepared to close shorts quickly if the dollar's decline accelerates, as this could reignite crypto buying

If Youre Uncertain

• Focus on range-bound strategies between $98,000 and $105,000 until a clearer trend emerges
• Pay close attention to the relationship between the dollar and Bitcoin for clues about the next big move
• Look for a significant increase in trading volume as a sign that the market is ready to pick a direction

Evolving Trading Guidance

What Changed

From 7d Ago

A week ago, riding the Bitcoin uptrend was the clear play. Now, more caution is needed as short-term momentum has shifted.

From 14d Ago

Two weeks ago, the rising tide was lifting all boats in crypto. Today, we're seeing more divergence between Bitcoin and altcoins, requiring a more nuanced approach.

Current Best Opportunities

Range-trading Bitcoin or focusing on high-quality altcoins that are holding up well despite Bitcoin's weakness could be smart plays. Also, watch for oversold bounces if Bitcoin tests major support levels.

Approaches To Avoid

Avoid chasing breakouts in either direction until volume confirms the move. The current low-volume environment increases the risk of false signals.

Timing Considerations

Short-term trades are riskier in this choppy environment. Consider extending your timeframes or waiting for clearer setups before entering new positions.

Key Levels To Watch

Critical Thresholds

For Bitcoin, $100,000 is the key psychological level to watch. In the broader market, keep an eye on the DXY 98.00 level, as a bounce there could signal trouble for crypto.

Recent Breakouts

Bitcoin breaking below its 20-day EMA is the most significant recent technical development.

Approaching Tests

Watch for a test of the 50-day EMA on Bitcoin (currently around $97,000) if the current weakness persists. This could be a make-or-break level for the medium-term trend.

Final Advice

Main Takeaway

Stay nimble and don't overcommit. The market is sending mixed signals, so capital preservation should be the priority until a clearer trend emerges.

Biggest Change

The disconnect between dollar weakness and Bitcoin's performance is the most significant shift. This unusual behavior warrants extra caution and attention.

Risk Reminder

Remember, periods of low volume and conflicting signals often precede major moves. Be prepared for a potential surge in volatility, and make sure your position sizes account for this risk.