07/21 - Macro for Humans

Market Overview

Headline

Bitcoin Surges Past $117K as Altcoins Steal the Spotlight

Summary

Bitcoin continues its impressive rally, but a sharp decline in BTC dominance suggests altcoins are the real stars today. Meanwhile, rising Treasury yields and a strong S&P 500 paint a complex picture for risk assets.

Mood

The crypto market feels like a packed concert where Bitcoin is the headliner, but the opening acts (altcoins) are stealing the show. There's excitement in the air, but also a sense that the crowd might be getting a bit too rowdy.

What Changed Recently

The most dramatic shift is the sudden drop in Bitcoin dominance, falling from 65% to 60.84% in just two weeks. This suggests a significant appetite for altcoin risk that wasn't present even a few days ago.

Comparative Market Analysis

Vs 7 Days Ago

Stocks

The S&P 500 has continued its upward march, gaining 2.5% in two weeks. This risk-on sentiment in traditional markets is likely fueling some of the excitement we're seeing in crypto, especially for altcoins.

Dollar

The DXY is consolidating around 98.00, showing relative stability. This neutral dollar stance isn't providing much directional pressure on crypto, allowing internal market dynamics to take center stage.

Interest Rates

The 10-year Treasury yield has been creeping up, now at 4.41%. This subtle shift towards higher rates hasn't dampened crypto enthusiasm yet, but it's a potential headwind to watch.

Bitcoin Dominance

BTC dominance has taken a nosedive, dropping nearly 5% in a week. This is a clear sign that traders are rotating heavily into altcoins, seeking higher-risk, higher-reward opportunities.

Vs 14 Days Ago

Stocks

The S&P 500's 2.5% gain over two weeks reflects growing optimism in traditional markets. This broader risk appetite is providing a supportive backdrop for crypto's current bull run.

Dollar

The dollar's consolidation phase has lasted for at least two weeks now. This stability has allowed crypto to forge its own path without significant forex pressure.

Interest Rates

The uptrend in Treasury yields over the past two weeks suggests growing expectations of delayed rate cuts. While this hasn't hurt crypto yet, it's a potential concern for the medium-term outlook.

Bitcoin Dominance

The sharp 5% drop in Bitcoin dominance over two weeks marks a significant shift in market dynamics. We've moved from a Bitcoin-led rally to a much more diverse altcoin-driven market.

Crypto Specific Trends

Current State

Bitcoin Vs Alts

Money is flowing aggressively into altcoins right now. It's like Bitcoin opened the door to the party, but now everyone's rushing past it to dance with the altcoins.

Hot Sectors

DeFi and Layer-2 scaling solutions are seeing particular interest today, likely driven by hopes for increased adoption and improved infrastructure.

Volume And Activity

Trading volume for altcoins has spiked significantly, especially in the last 3 days. This suggests strong conviction in the altcoin rally, at least in the short term.

Key Shifts

Week Over Week

The most dramatic change is the rapid acceleration of altcoin interest. A week ago, Bitcoin was still the clear leader; now, it's struggling to maintain market share despite price gains.

Two Week Trend

Over two weeks, we've seen a complete reversal from Bitcoin dominance to altcoin season. This shift has been accompanied by a general increase in risk appetite across both crypto and traditional markets.

Notable Reversals

The most significant reversal is in market leadership. Bitcoin's price is still climbing, but it's no longer driving the overall crypto narrative as it was two weeks ago.

What This Means For Traders

If Youre Bullish

• Look for breakouts in mid to large-cap altcoins that are just starting to move. The FOMO hasn't hit everywhere yet.
• Wait for pullbacks to key support levels before entering. In such a hot market, you want to buy dips rather than chase pumps.
• Set trailing stop-losses to protect gains. This rally is strong, but altcoin moves can reverse quickly.

If Youre Bearish

• Focus on overbought altcoins that have seen massive pumps without fundamental news to back it up.
• Wait for clear reversal patterns like double tops or bearish engulfing candles before shorting.
• Keep positions smaller than usual. Fighting a strong uptrend is risky, so manage your exposure carefully.

If Youre Uncertain

• Consider a barbell strategy: keep some funds in Bitcoin for stability, and use a small portion to capture altcoin momentum.
• Watch the Bitcoin dominance chart closely. If it bounces from its current oversold levels, it could signal a rotation back to BTC.
• A break of $120,000 in Bitcoin or a reversal in the S&P 500 could provide clearer directional cues.

Evolving Trading Guidance

What Changed

From 7d Ago

A week ago, focusing on Bitcoin and large-cap altcoins was the safer play. Now, the real action is in a broader range of altcoins, requiring a more active and diversified approach.

From 14d Ago

Two weeks ago, simply holding Bitcoin was a winning strategy. The market now rewards more active altcoin trading and rebalancing.

Current Best Opportunities

Look for altcoins with strong fundamentals that haven't yet seen major pumps. Coins with upcoming protocol upgrades or partnership announcements could be particularly promising.

Approaches To Avoid

Avoid going all-in on Bitcoin right now, despite its price strength. Also, be cautious about chasing altcoins that have already seen 50%+ gains in the past week.

Timing Considerations

This is a time for active management. Consider taking profits more frequently and be prepared to rotate between coins as momentum shifts.

Key Levels To Watch

Critical Thresholds

Bitcoin at $120,000 and Ethereum at $8,000 are the big psychological levels to watch. Breaks above could accelerate the entire market.

Recent Breakouts

Many altcoins have broken above their previous cycle highs in the past week. These new levels will act as support on pullbacks.

Approaching Tests

Bitcoin is approaching a test of $120,000, and the total crypto market cap is nearing $4 trillion. These big round numbers could provide resistance.

Final Advice

Main Takeaway

Stay nimble and don't be afraid to take profits. This altcoin season is providing great opportunities, but it's also increasing overall market risk.

Biggest Change

The rapid shift from Bitcoin dominance to altcoin outperformance is the most significant change from two weeks ago. This completely alters optimal trading strategies.

Risk Reminder

Altcoin rallies can end as quickly as they begin. Always keep a portion of your portfolio in less volatile assets as a hedge against sudden reversals.