08/18 - Macro for Humans
Market Overview
Headline
Bitcoin Consolidates Near $117K as Altcoins Gain Steam
Summary
Bitcoin is taking a breather after its recent rally, while altcoins are showing renewed strength. The broader financial landscape remains supportive, with a weakening dollar and stable interest rates creating a favorable environment for crypto.
Mood
Cautiously optimistic with a growing appetite for risk. It's like the market just finished a big meal (the recent Bitcoin rally) and is now deciding what's for dessert (altcoin opportunities).
What Changed Recently
Bitcoin's momentum has slowed, but altcoins are picking up the slack. The dollar's continued weakness is providing a tailwind for crypto across the board.
Comparative Market Analysis
Vs 7 Days Ago
Stocks
The S&P 500 is up 1.21% over the past two weeks, maintaining its bullish trend. This risk-on sentiment in traditional markets is spilling over into crypto, especially benefiting altcoins.
Dollar
The DXY (Dollar Index) continues its bearish trend, now sitting at 97.37. This ongoing dollar weakness is a major boost for crypto, making it more attractive to global investors.
Interest Rates
The 10-year Treasury yield is consolidating between 4.10% and 4.55%, currently at 4.32%. This stability in rates is providing a steady backdrop for crypto, neither fueling nor hindering growth.
Bitcoin Dominance
Bitcoin dominance has dropped 2.08% in the last 14 days, signaling a shift towards altcoins. This rotation suggests traders are becoming more comfortable taking on additional risk.
Vs 14 Days Ago
Stocks
The stock market's steady climb over the past two weeks has created a risk-friendly environment, encouraging more speculative crypto plays.
Dollar
The dollar's persistent weakness over the past 14 days has been a significant tailwind for crypto, making the entire asset class more attractive globally.
Interest Rates
Interest rates have remained relatively stable over the past two weeks, providing a consistent backdrop for crypto markets and allowing traders to focus on crypto-specific factors.
Bitcoin Dominance
The 2.08% drop in Bitcoin dominance over 14 days marks a clear shift in market dynamics, with altcoins gaining favor as the rally matures.
Crypto Specific Trends
Current State
Bitcoin Vs Alts
Money is currently flowing from Bitcoin into altcoins. It's like Bitcoin cleared the path, and now altcoins are following the trail.
Hot Sectors
Small-cap altcoins are seeing the most interest today, as traders look for higher-risk, higher-reward opportunities.
Volume And Activity
Trading volume is above average with a recent spike, suggesting strong conviction in the current market moves, particularly in the altcoin space.
Key Shifts
Week Over Week
Over the past week, we've seen a clear rotation from Bitcoin dominance to altcoin strength, indicating growing risk appetite.
Two Week Trend
The two-week trend shows a maturing rally, with Bitcoin's gains moderating while altcoins play catch-up.
Notable Reversals
The most significant reversal is in market leadership – Bitcoin led the charge initially, but altcoins are now taking center stage.
What This Means For Traders
If Youre Bullish
- Look for breakouts in mid to small-cap altcoins, especially those that haven't yet rallied significantly
- Wait for pullbacks to key moving averages (like the 20 EMA) as potential entry points
- Consider scaling into positions rather than going all-in, as volatility could increase in the short term
If Youre Bearish
- Focus on overbought conditions in altcoins that have seen parabolic moves
- Watch for bearish divergences on the 4-hour and daily charts as potential short entry signals
- Keep stops tight, as the overall trend remains bullish and sharp reversals are possible
If Youre Uncertain
- Consider pair trades: long promising altcoins while hedging with a short on Bitcoin or large-caps
- Watch the $120,000 level on Bitcoin – a break above could reignite overall market momentum
- Pay attention to volume – declining volume could signal a loss of momentum, while increasing volume confirms the trend
Evolving Trading Guidance
What Changed
From 7d Ago
A week ago, focusing on Bitcoin and large-caps was the safer play. Now, calculated risks on altcoins offer potentially higher rewards.
From 14d Ago
Two weeks ago, catching the overall market momentum was key. Now, selectivity and timing entries in specific altcoins is more important.
Current Best Opportunities
Look for altcoins showing strong fundamentals that haven't yet had their 'moment' in this rally. Entries on pullbacks to support levels or breakouts from consolidation patterns offer good risk/reward.
Approaches To Avoid
Chasing parabolic moves in altcoins that have already rallied significantly is risky. Also, being overly bearish on Bitcoin despite the consolidation could be dangerous.
Timing Considerations
Intraday and swing trading timeframes (1-hour to daily charts) seem most appropriate for the current market conditions. Be prepared for quick moves and have clear exit strategies.
Key Levels To Watch
Critical Thresholds
Bitcoin at $120,000 and Ethereum at $3,500 are key psychological levels that could trigger broader market moves if breached.
Recent Breakouts
Many altcoins have broken above their 200-day moving averages in the past week, confirming bullish sentiment.
Approaching Tests
Bitcoin is approaching a test of $120,000 resistance, while the total crypto market cap is nearing the $3 trillion mark – both significant psychological levels.
Final Advice
Main Takeaway
The crypto market is showing a healthy rotation from Bitcoin to altcoins, presenting opportunities for calculated risk-taking in the altcoin space.
Biggest Change
The most significant shift is the clear rotation of capital from Bitcoin to altcoins over the past two weeks, signaling growing risk appetite.
Risk Reminder
While conditions favor risk-taking, remember that altcoin rallies can reverse quickly. Always use stop-losses and avoid overexposure to any single position.