06/23 - Macro for Humans

Market Overview

Headline

Bitcoin Consolidates Above $100K as Dollar Weakens: A Shifting Landscape for Crypto Traders

Summary

Global markets are in flux, with Bitcoin holding above $100K despite short-term bearish signals. The weakening US dollar and stable Treasury yields are creating a complex environment for crypto traders, with Bitcoin dominance remaining high.

Mood

Cautiously optimistic, but with a sense of uncertainty – like a hiker pausing to check their map at a foggy crossroads.

What Changed Recently

Bitcoin has slipped below its 20-day moving average, signaling potential short-term weakness. Meanwhile, the US dollar's continued decline is providing a supportive backdrop for risk assets.

Comparative Market Analysis

Vs 7 Days Ago

Stocks

The S&P 500 has continued its upward climb, now consolidating near $6000. This risk-on sentiment in traditional markets is generally supportive for crypto, but Bitcoin's recent weakness suggests some decoupling.

Dollar

The US Dollar Index has fallen further, now down 0.41% over the past week. This continued weakness typically boosts Bitcoin, but the crypto market seems to be taking a breather despite this tailwind.

Interest Rates

The 10-year Treasury yield has dropped 15 basis points over the past two weeks, settling around 4.37%. This decline in yields often supports risk assets like crypto, but the effect seems muted in the current market.

Bitcoin Dominance

Bitcoin dominance has remained strong at 65.71%, indicating that despite Bitcoin's short-term weakness, traders are still favoring it over altcoins in this uncertain environment.

Vs 14 Days Ago

Stocks

The S&P 500's steady climb over the past two weeks reflects growing risk appetite, which normally benefits crypto. However, Bitcoin's recent consolidation suggests it may be disconnecting from this broader trend.

Dollar

The dollar's two-week decline has accelerated, creating an increasingly favorable backdrop for Bitcoin and other cryptos. This divergence between dollar weakness and Bitcoin's consolidation is unusual and worth monitoring.

Interest Rates

The notable drop in Treasury yields over the past 14 days typically signals increased appetite for risk assets. The fact that crypto isn't rallying in response is a departure from recent patterns.

Bitcoin Dominance

Bitcoin's market dominance has held steady over the past two weeks, suggesting that despite short-term price weakness, there hasn't been a significant rotation into altcoins.

Crypto Specific Trends

Current State

Bitcoin Vs Alts

Money is primarily sticking with Bitcoin right now. It's like investors are huddling around a campfire (Bitcoin) rather than exploring the woods (altcoins) in this uncertain environment.

Hot Sectors

With Bitcoin dominance high, there's less action in specific altcoin sectors. However, any projects closely tied to real-world adoption or institutional interest are seeing pockets of strength.

Volume And Activity

Trading volume for Bitcoin is decreasing, suggesting a lack of conviction in either direction. It's like the market is holding its breath, waiting for a clear signal.

Key Shifts

Week Over Week

The most significant change is Bitcoin's slip below its 20-day moving average, hinting at potential short-term weakness despite broader market support.

Two Week Trend

Over the past 14 days, we've seen a growing disconnect between traditional risk asset performance (stocks up, dollar down) and crypto's muted response.

Notable Reversals

Bitcoin's shift from an uptrend to consolidation stands out, especially given the supportive macro environment. This could signal changing dynamics within the crypto market itself.

What This Means For Traders

If Youre Bullish

• Look for entries on dips towards the $96,000-$100,000 support zone, but wait for signs of buying pressure before committing.
• Watch for a potential breakout above $108,000 as confirmation of bullish momentum returning.
• Consider using tighter stop losses than usual, given the conflicting signals between crypto and traditional markets.

If Youre Bearish

• Short-term traders might look for entries near the recent highs around $108,000-$110,000 if retested.
• Wait for a clear break below $100,000 before considering more aggressive short positions.
• Be cautious of potential sudden reversals, given the supportive macro environment that could quickly reignite bullish sentiment.

If Youre Uncertain

• Focus on range-bound strategies between $100,000 and $108,000 until a clearer trend emerges.
• Pay close attention to the $100,000 psychological support – a strong bounce here could signal buying interest, while a break below could trigger further selling.
• Watch for any sudden increase in trading volume, which could indicate the end of this consolidation phase.

Evolving Trading Guidance

What Changed

From 7d Ago

A week ago, riding the uptrend was the preferred approach. Now, more cautious, range-bound strategies are favored as we await clearer direction.

From 14d Ago

Two weeks ago, the aligned uptrends in both crypto and traditional markets supported aggressive bullish strategies. Today's environment calls for much more selective, cautious trading.

Current Best Opportunities

Range-trading strategies and carefully timed dip-buying near strong support levels offer the best risk-reward in the current environment.

Approaches To Avoid

Avoid aggressive trend-following strategies or large position sizes given the conflicting signals and decreased market conviction.

Timing Considerations

Shorter timeframes (4h and below) may offer cleaner setups within the consolidation range. Be prepared for quieter trading conditions until a clear breakout occurs.

Key Levels To Watch

Critical Thresholds

The $100,000 level for Bitcoin is crucial – holding above keeps the longer-term uptrend intact, while a decisive break below could trigger a larger correction.

Recent Breakouts

Bitcoin breaking below its 20-day EMA is significant, suggesting short-term momentum has shifted bearish.

Approaching Tests

Watch for a potential test of the 50-day EMA, currently around $95,000, which could provide strong support if reached.

Final Advice

Main Takeaway

Stay nimble and avoid overcommitting in either direction until Bitcoin resolves its consolidation phase, despite the seemingly supportive macro environment.

Biggest Change

The disconnect between crypto's consolidation and the risk-on sentiment in traditional markets is the most significant shift from two weeks ago.

Risk Reminder

Remember, periods of low volatility often precede major moves. Keep position sizes modest and be prepared for a potential surge in volatility in the coming days.