07/16 - Macro for Humans
Market Overview
Headline
Bitcoin Surges Past $117K as Dollar Shows Signs of Life
Summary
Bitcoin's bullish momentum continues, pushing past $117,000 despite a strengthening US dollar. Stock markets remain upbeat, while interest rates climb, creating a complex landscape for crypto traders.
Mood
Cautiously optimistic with a dash of FOMO (Fear of Missing Out)
What Changed Recently
The US dollar has found its footing after weeks of decline, potentially putting some pressure on Bitcoin's meteoric rise.
Comparative Market Analysis
Vs 7 Days Ago
Stocks
S&P 500 continues its upward march, providing a supportive backdrop for risk assets like crypto. This risk-on sentiment is helping fuel Bitcoin's rally.
Dollar
The dollar has rebounded about 1% in the past week, which could start to create headwinds for Bitcoin if the trend continues.
Interest Rates
10-year Treasury yields are up 13 basis points, signaling growing economic optimism but also potentially making bonds more attractive compared to crypto.
Bitcoin Dominance
Bitcoin dominance has slipped slightly as some traders rotate into altcoins, looking for higher potential returns.
Vs 14 Days Ago
Stocks
The S&P 500 has maintained its bullish trend over two weeks, creating a sustained favorable environment for crypto growth.
Dollar
The dollar's 1.67% gain over two weeks marks a potential trend reversal that could impact crypto if it accelerates.
Interest Rates
The steady rise in yields over the past two weeks suggests a shift in market expectations towards higher rates, which could eventually pressure crypto valuations.
Bitcoin Dominance
Bitcoin's share of the overall crypto market has been gradually declining, indicating growing appetite for altcoin risk.
Crypto Specific Trends
Current State
Bitcoin Vs Alts
Money is cautiously flowing into both Bitcoin and select altcoins. Bitcoin's strength is attracting buyers, but its high price is also pushing some traders to seek potentially higher returns in alts.
Hot Sectors
DeFi and AI-related tokens are seeing renewed interest as Bitcoin's rise lifts the entire market.
Volume And Activity
Trading volume for Bitcoin is decreasing despite price increases, suggesting some caution at these high levels.
Key Shifts
Week Over Week
Altcoin interest has picked up noticeably in the past week as Bitcoin consolidates its gains above $100,000.
Two Week Trend
The market has shifted from 'Bitcoin or nothing' to a more balanced approach, with traders more willing to take altcoin risks.
Notable Reversals
The dollar's rebound is the most significant reversal, potentially changing the dynamics that have fueled crypto's recent surge.
What This Means For Traders
If Youre Bullish
- Look for high-volume breakouts in top altcoins as they play catch-up to Bitcoin's gains
- Wait for pullbacks to key moving averages (like the 20 EMA) for potential entry points in Bitcoin
- Consider scaling into positions rather than going all-in, given the extended nature of the current rally
If Youre Bearish
- Watch for a daily close below $115,000 in Bitcoin as a potential sign of exhaustion
- Look for divergences between Bitcoin's price and RSI for potential short-term top signals
- Be prepared to close shorts quickly if the uptrend resumes; this is still a strong bull market
If Youre Uncertain
- Focus on major support levels like $110,000 for Bitcoin as potential 'dip-buying' opportunities
- Pay close attention to the dollar index (DXY) – further strength could signal caution for crypto
- Look for altcoins showing strength relative to Bitcoin as potential hedges
Evolving Trading Guidance
What Changed
From 7d Ago
The focus has shifted from 'buy Bitcoin at any price' to more selective buying on dips and exploring altcoin opportunities.
From 14d Ago
Two weeks ago, the rally felt more speculative. Now, with Bitcoin holding above $100,000, there's a sense that this could be a sustained bull market.
Current Best Opportunities
Look for high-quality altcoins that haven't yet matched Bitcoin's percentage gains. Also, consider buying any significant dips in Bitcoin, as bullish sentiment remains strong.
Approaches To Avoid
Avoid chasing parabolic moves in small-cap altcoins, and be cautious about heavily leveraged longs given the extended nature of the rally.
Timing Considerations
Intraday trading may be challenging due to decreased Bitcoin volatility. Consider longer timeframes and swing trading approaches.
Key Levels To Watch
Critical Thresholds
For Bitcoin, $120,000 is the big psychological level to watch. For the dollar index, a move above 100 could signal trouble for crypto.
Recent Breakouts
Bitcoin's push past $115,000 and the S&P 500 crossing $6,200 are the most significant recent breakouts.
Approaching Tests
The 10-year Treasury yield is approaching 4.5%, a level that could spook equity markets if breached.
Final Advice
Main Takeaway
Stay bullish but vigilant. This rally has legs, but be prepared for increased volatility as Bitcoin approaches $120,000.
Biggest Change
The dollar's rebound is the most significant shift. If it continues, it could challenge crypto's upward momentum.
Risk Reminder
Remember, we're in uncharted territory with Bitcoin above $100,000. Don't be afraid to take some profits, and always size your positions appropriately.