07/12 - Macro for Humans
Market Overview
Headline
Bitcoin Surges Past $110K as Stock Rally Continues, Dollar Weakens
Summary
Bitcoin's bullish momentum accelerates amid a strong stock market and weakening US dollar. Rising bond yields signal shifting interest rate expectations, creating a complex but generally crypto-friendly environment.
Mood
The market feels like a party that's in full swing, but with a few guests starting to glance at their watches.
What Changed Recently
Bitcoin broke above $110,000, a significant psychological barrier. The S&P 500 continues its upward march, while the US dollar shows signs of weakness.
Comparative Market Analysis
Vs 7 Days Ago
Stocks
The S&P 500 has maintained its bullish trend, providing a supportive backdrop for risk assets like crypto. This 'risk-on' sentiment is helping fuel Bitcoin's recent gains.
Dollar
The US dollar has weakened over the past week, typically a positive sign for Bitcoin as it becomes relatively more valuable against fiat currencies.
Interest Rates
Bond yields have risen, suggesting expectations of higher interest rates. While this can sometimes pressure crypto, the effect seems muted in the current bullish environment.
Bitcoin Dominance
Bitcoin dominance has slightly decreased, indicating some capital flow into altcoins as traders gain confidence in the broader crypto market.
Vs 14 Days Ago
Stocks
The stock market's bullish trend has solidified over the past two weeks, creating a sustained favorable environment for crypto growth.
Dollar
The dollar's weakness has become more pronounced compared to two weeks ago, providing a tailwind for Bitcoin's impressive rally.
Interest Rates
The upward trend in bond yields has accelerated, reflecting a significant shift in interest rate expectations that could eventually impact crypto market dynamics.
Bitcoin Dominance
While still high at 64.62%, Bitcoin dominance has edged lower over two weeks, suggesting a gradual increase in altcoin interest as the bull market matures.
Crypto Specific Trends
Current State
Bitcoin Vs Alts
Money is flowing into both Bitcoin and altcoins, with Bitcoin leading the charge but altcoins starting to catch up as confidence grows.
Hot Sectors
DeFi and Layer 2 scaling solutions are seeing increased interest as the market looks for the next big innovation.
Volume And Activity
Trading volume for Bitcoin has spiked recently, indicating strong conviction in the current rally, though it's starting to decrease which warrants some caution.
Key Shifts
Week Over Week
Bitcoin has broken out of its previous range, accelerating gains and pulling the broader market up with it.
Two Week Trend
We're seeing a clear shift from consolidation to a strong uptrend, with momentum building across the crypto market.
Notable Reversals
The dollar's previous strength has reversed, removing a headwind that had been constraining crypto growth.
What This Means For Traders
If Youre Bullish
- Look for high-volume breakouts above key resistance levels, especially in top-tier altcoins
- Wait for pullbacks to key moving averages (like the 20 EMA) as potential entry points
- Consider trailing stops to protect gains while letting winners run in this strong trend
If Youre Bearish
- Focus on overbought conditions in individual assets rather than betting against the overall trend
- Watch for divergences between price and RSI on higher timeframes as potential reversal signals
- Be prepared to quickly close shorts if key resistance levels break with strong volume
If Youre Uncertain
- Consider using options strategies to benefit from increased volatility without picking a direction
- Watch the $120,000 and $125,000 levels on Bitcoin as key areas that could provide more clarity
- Pay attention to stock market performance and dollar strength for signs of a shift in the macro environment
Evolving Trading Guidance
What Changed
From 7d Ago
The market has shifted from range-bound trading to a clear uptrend, favoring breakout strategies over mean reversion plays.
From 14d Ago
Two weeks ago, caution was warranted due to consolidation. Now, the trend is your friend, but be aware of potential overextension.
Current Best Opportunities
Look for high-volume breakouts in strong altcoins that are catching up to Bitcoin's performance. Also, consider swing trades on dips in the overall uptrend.
Approaches To Avoid
Avoid trying to pick tops or aggressively shorting in this strong bullish environment. Range-trading strategies that worked during consolidation are now less effective.
Timing Considerations
Intraday trading may be challenging due to strong momentum. Swing trading with a multi-day to weekly perspective aligns better with the current trend.
Key Levels To Watch
Critical Thresholds
Bitcoin $120,000 and $125,000 are major psychological and technical resistance levels that could determine the strength of this rally.
Recent Breakouts
Bitcoin breaking above $110,000 is significant. The S&P 500 continues to make new all-time highs, reinforcing the bullish narrative.
Approaching Tests
Watch for a potential test of the 70 RSI level on Bitcoin's daily chart, which could signal overbought conditions if reached.
Final Advice
Main Takeaway
Ride the bullish wave but keep an eye on warning signs of overextension. This rally has legs, but nothing goes up forever.
Biggest Change
The shift from consolidation to a strong uptrend is the most significant change, altering optimal trading strategies across the board.
Risk Reminder
While the trend is strong, the rapid rise increases the risk of sharp corrections. Always use stop losses and avoid overleveraging, especially at these elevated levels.