07/13 - Macro for Humans

Market Overview

Headline

Bitcoin Surges to $117K as Dollar Weakens: A Perfect Storm for Crypto Bulls?

Summary

Bitcoin has broken out to new yearly highs around $117,000, riding a wave of dollar weakness and strong stock market performance. Meanwhile, rising Treasury yields signal shifting interest rate expectations, creating a complex but largely favorable environment for crypto.

Mood

The market feels like a rollercoaster that's just crested the big hill – exhilarating, but with a touch of 'how long can this last?' nervousness.

What Changed Recently

Bitcoin's surge past $115,000 is the headline-grabber, but the weakening dollar and rising Treasury yields are the behind-the-scenes forces reshaping the playing field.

Comparative Market Analysis

Vs 7 Days Ago

Stocks

The S&P 500 is up 2.62% in just two weeks, creating a risk-on appetite that's spilling over into crypto. This bullish stock sentiment is adding fuel to Bitcoin's fire.

Dollar

The dollar has weakened significantly, dropping below all major EMAs. This dollar weakness is a major tailwind for Bitcoin and other cryptocurrencies, making them more attractive to global investors.

Interest Rates

Treasury yields have spiked, with the 10-year up 25 bps in two weeks. This shift suggests changing interest rate expectations, which could eventually cool the crypto rally if it continues.

Bitcoin Dominance

Bitcoin dominance remains high at 64.67%, but has seen a slight pullback. This suggests the rally is still Bitcoin-centric, but altcoins might be starting to catch up.

Vs 14 Days Ago

Stocks

The stock market's 2.62% gain over two weeks shows accelerating bullish momentum, creating an even more favorable backdrop for crypto risk-taking compared to two weeks ago.

Dollar

The dollar's bearish trend has intensified over the past 14 days, moving from a neutral position to a decidedly weak one. This extended dollar weakness is a key driver of Bitcoin's current strength.

Interest Rates

The 25 bps rise in 10-year yields over two weeks marks a significant shift in interest rate expectations. This could eventually pressure crypto if it leads to tighter financial conditions, but for now, the impact is overshadowed by dollar weakness.

Bitcoin Dominance

Bitcoin dominance has remained relatively stable over the past 14 days, suggesting that while Bitcoin is leading the charge, it hasn't significantly increased its market share versus altcoins in the longer-term view.

Crypto Specific Trends

Current State

Bitcoin Vs Alts

Money is primarily flowing into Bitcoin right now, as evidenced by its dominance and price action. However, there are early signs that altcoins might be starting to play catch-up.

Hot Sectors

Large-cap cryptocurrencies and DeFi tokens linked to Bitcoin's ecosystem are seeing increased interest as Bitcoin's rally creates a halo effect.

Volume And Activity

Trading volume has increased, particularly for Bitcoin, indicating strong conviction in this rally. However, altcoin volumes are also starting to pick up, suggesting broadening participation.

Key Shifts

Week Over Week

The most significant change is Bitcoin breaking out above $115,000, shifting the market from an accumulation phase to a clear markup phase.

Two Week Trend

Over the past 14 days, we've seen a acceleration of bullish momentum, with Bitcoin's gains outpacing altcoins but signs of alt season potentially brewing.

Notable Reversals

The dollar's shift from neutral to bearish over the past two weeks has been a key reversal, providing a major boost to crypto markets.

What This Means For Traders

If Youre Bullish

• Look for pullbacks to support levels as potential entry points for Bitcoin longs
• Wait for a daily close above $120,000 as confirmation for the next leg up
• Consider scaling into positions rather than going all-in, given the overbought conditions

If Youre Bearish

• Focus on overbought altcoins that haven't kept pace with Bitcoin's rally for potential shorts
• Watch for a break below the 10-day EMA as a sign that the rally might be losing steam
• Be prepared to quickly exit shorts if Bitcoin breaks above $120,000 convincingly

If Youre Uncertain

• Consider using options strategies to benefit from increased volatility without picking a direction
• Watch the $115,000 level on Bitcoin – holding above suggests continued strength, while a break below could signal a deeper pullback
• Monitor the dollar index (DXY) – further weakness likely supports crypto, while a bounce could lead to a correction

Evolving Trading Guidance

What Changed

From 7d Ago

A week ago, accumulation was the smart play. Now, we're in a momentum-driven market where breakout trades and trend-following strategies are more favorable.

From 14d Ago

Two weeks ago, range-bound trading strategies were optimal. The shift to a clear uptrend means traders need to adapt to a momentum-based approach and be wary of overbought conditions.

Current Best Opportunities

Buying pullbacks to support in Bitcoin and looking for high-quality altcoins showing relative strength offer the best risk/reward in the current environment.

Approaches To Avoid

Avoid aggressive counter-trend trades or trying to call the top in Bitcoin. Also, be cautious about chasing low-quality altcoins that haven't yet participated in the rally.

Timing Considerations

Intraday and swing trading timeframes are favorable given the increased volatility. However, be prepared for quick moves and consider scaling into positions rather than taking large, single entries.

Key Levels To Watch

Critical Thresholds

Bitcoin $120,000 and Ethereum $3,500 are the key psychological levels to watch. Breaks above could accelerate the rally, while failure to breach might signal consolidation.

Recent Breakouts

Bitcoin breaking above $115,000 and the S&P 500 pushing to new highs are the most significant recent breakouts.

Approaching Tests

The 70 RSI level on Bitcoin's daily chart is approaching – historically, moves above this level have led to short-term tops.

Final Advice

Main Takeaway

Ride the bullish wave but keep your life jacket on – this rally has room to run but prepare for increased volatility and potential sharp pullbacks.

Biggest Change

The shift from a range-bound market to a clear uptrend, driven by Bitcoin's breakout and accelerating dollar weakness, is the most significant change from two weeks ago.

Risk Reminder

Remember, markets this bullish can turn quickly. Always use stop losses, consider taking partial profits, and never risk more than you can afford to lose.