07/22 - Macro for Humans
Market Overview
Headline
Crypto Surges as Dollar Wobbles: Altseason in Full Swing?
Summary
Bitcoin breaks $117k while altcoins outpace, fueled by a mildly weakening dollar and continued stock market strength. Bond yields are up, but crypto enthusiasm remains high.
Mood
The market feels like a party that's hitting its stride – upbeat and energetic, but with a few partygoers keeping an eye on the clock.
What Changed Recently
Bitcoin dominance has taken a sharp dive, signaling a flood of capital into altcoins. The S&P 500 continues its march upward, providing a supportive backdrop for risk assets.
Comparative Market Analysis
Vs 7 Days Ago
Stocks
Stocks have maintained their upward momentum, gaining another 1-2% this week. This continued 'risk-on' sentiment is providing a tailwind for crypto, especially more speculative altcoins.
Dollar
The dollar has shown signs of weakening, retreating from recent highs. This slight pullback is giving crypto room to breathe and attract capital from international investors.
Interest Rates
Bond yields have inched higher, reflecting expectations of continued economic strength. While this could eventually pressure crypto, for now, the market is shrugging it off in favor of growth assets.
Bitcoin Dominance
Bitcoin's market share has declined notably, dropping below key moving averages. This signals a strong rotation into altcoins as traders chase higher returns.
Vs 14 Days Ago
Stocks
The S&P 500 is up over 2.5% in two weeks, reflecting growing economic optimism. This risk appetite is spilling over into crypto, supporting both Bitcoin and altcoins.
Dollar
The dollar has been consolidating after its recent uptrend, providing some relief for crypto. While not weak, the pause in dollar strength has opened the door for this crypto rally.
Interest Rates
The 10-year yield has climbed from around 4.2% to 4.43%, a significant move that would normally pressure crypto. The fact that digital assets are rallying anyway shows the current strength of bullish sentiment.
Bitcoin Dominance
Bitcoin dominance has plummeted over the past two weeks, falling well below all major moving averages. This marks a clear shift in the market, with altcoins now leading the charge.
Crypto Specific Trends
Current State
Bitcoin Vs Alts
Money is flowing strongly into altcoins right now. It's like Bitcoin opened the door, but now everyone's rushing past it to get to the altcoin party inside.
Hot Sectors
DeFi, Layer-2 scaling solutions, and AI-related tokens are seeing the most interest today. It's as if traders are placing bets on the infrastructure of the future crypto economy.
Volume And Activity
Trading volume is elevated, especially in altcoins. This suggests real conviction behind the moves, not just a temporary spike.
Key Shifts
Week Over Week
The most striking change is the acceleration of the move from Bitcoin to altcoins. A week ago, it was a trickle – now it's a flood.
Two Week Trend
Over two weeks, we've seen a complete sentiment shift from cautious optimism to almost euphoric risk-taking in the altcoin space.
Notable Reversals
Bitcoin dominance has reversed sharply. Two weeks ago, it was holding steady – now it's in freefall as altcoin season takes hold.
What This Means For Traders
If Youre Bullish
- Look for high-quality altcoins that haven't yet seen major pumps. The rotation effect suggests they could be next.
- Wait for pullbacks to moving averages as potential entry points. In strong uptrends, these often act as support.
- Consider taking partial profits on big runs. This bull move is strong, but altcoin volatility cuts both ways.
If Youre Bearish
- Focus on overbought conditions in individual altcoins rather than shorting the overall market trend.
- Watch for divergences between price and RSI on shorter timeframes as potential reversal signals.
- Keep position sizes small. Swimming against this bullish tide can be dangerous if not managed carefully.
If Youre Uncertain
- Dollar-cost averaging into both Bitcoin and a basket of large-cap altcoins can provide balanced exposure.
- Keep an eye on the $120,000 level for Bitcoin. How it reacts there could set the tone for the broader market.
- A reversal in stocks or a sharp rise in the dollar could signal it's time to be more defensive.
Evolving Trading Guidance
What Changed
From 7d Ago
A week ago, balanced Bitcoin and altcoin exposure made sense. Now, an altcoin overweight looks more attractive for risk-tolerant traders.
From 14d Ago
Two weeks ago, we were still in a 'Bitcoin first' market. That's completely flipped, with altcoins now leading the charge.
Current Best Opportunities
Look for altcoins with strong fundamentals that are just starting to break out. Entries on pullbacks to support in uptrends offer a good risk/reward balance.
Approaches To Avoid
Avoid trying to call the top in altcoins or blindly shorting the market. Also, be cautious about chasing coins that have already seen massive pumps.
Timing Considerations
Shorter timeframes (4h and below) are active now. Be prepared for quick moves and consider taking profits more frequently than in slower markets.
Key Levels To Watch
Critical Thresholds
Bitcoin $120,000 and Ethereum $6,000 are major psychological levels that could influence the entire market.
Recent Breakouts
Many altcoins have broken above their 2024 highs in the past week. These new levels will be watched as potential support on pullbacks.
Approaching Tests
The total crypto market cap is nearing its all-time high. How it reacts at that historic level could determine if this rally has legs or needs to cool off.
Final Advice
Main Takeaway
The altcoin season is in full swing, but remember – the faster they rise, the harder they can fall. Stay nimble and don't let FOMO cloud your judgment.
Biggest Change
The dramatic flip from Bitcoin dominance to altcoin outperformance is the key shift driving current opportunities and risks.
Risk Reminder
In heated markets like this, it's crucial to have a plan for both entries AND exits. Don't let greed keep you in positions too long – profits aren't real until you take them.