09/19 - Macro for Humans

Market Overview

Headline

Crypto Surges as Dollar Weakens: Altcoin Season in Full Swing?

Summary

Bitcoin breaks $117,000 while altcoins outperform, fueled by falling US Treasury yields and a weakening dollar. Stock market strength adds to the risk-on sentiment, creating a potent mix for crypto gains.

Mood

The market feels like a party that's just getting started. There's excitement in the air, but also a hint of caution as some wonder how long the good times can last.

What Changed Recently

The most significant shift is the accelerating weakness in the US dollar, which has really opened the floodgates for crypto gains across the board.

Comparative Market Analysis

Vs 7 Days Ago

Stocks

The S&P 500 has continued its upward march, maintaining bullish momentum. This risk-on attitude in traditional markets is providing a supportive backdrop for crypto, encouraging more speculative investment.

Dollar

The US dollar has weakened noticeably over the past week, acting like rocket fuel for crypto prices. A falling dollar typically makes Bitcoin and other cryptos more attractive as alternative stores of value.

Interest Rates

Treasury yields have dropped significantly, suggesting lower interest rate expectations. This 'cheaper money' environment is making riskier assets like crypto more appealing compared to a week ago.

Bitcoin Dominance

Bitcoin dominance has declined over the past week, indicating that altcoins are outperforming Bitcoin. This shift suggests traders are becoming more comfortable taking on additional risk in the crypto space.

Vs 14 Days Ago

Stocks

The stock market's bullish trend has solidified over the past two weeks, creating a much more favorable environment for crypto compared to mid-September. This sustained optimism is providing a strong foundation for crypto gains.

Dollar

The dollar's decline has accelerated over the past two weeks, marking a significant shift in the macro landscape. This longer-term dollar weakness is creating a much more supportive environment for crypto than we saw earlier in the month.

Interest Rates

The drop in Treasury yields over the past two weeks signals a major shift in interest rate expectations. This evolving outlook is making the potential returns in crypto look increasingly attractive compared to traditional fixed-income investments.

Bitcoin Dominance

Bitcoin dominance has been on a steady decline over the past two weeks, indicating a clear shift towards altcoin outperformance. This trend suggests growing risk appetite in the crypto market compared to earlier in the month.

Crypto Specific Trends

Current State

Bitcoin Vs Alts

Money is flowing more aggressively into altcoins right now. It's like Bitcoin opened the door, but now the altcoins are rushing in to steal the show.

Hot Sectors

DeFi and Web3 projects are seeing renewed interest, likely benefiting from the overall increase in risk appetite.

Volume And Activity

Trading volume is showing steady growth, suggesting increasing conviction in the current rally. It's like watching the dance floor fill up as more people join the party.

Key Shifts

Week Over Week

The most notable change is the acceleration of altcoin performance relative to Bitcoin. A week ago, Bitcoin was leading the charge, but now altcoins are taking center stage.

Two Week Trend

Over the past two weeks, we've seen a clear shift from cautious optimism to full-blown bullish sentiment. The market has transitioned from 'dipping a toe in' to 'jumping in with both feet'.

Notable Reversals

The most significant reversal is in the US dollar's strength. Two weeks ago, a strong dollar was putting pressure on crypto. Now, dollar weakness is adding fuel to the crypto rally.

What This Means For Traders

If Youre Bullish

• Look for breakouts in mid-cap altcoins that are just starting to catch up to the market leaders
• 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 the market may be getting overheated in the short term

If Youre Bearish

• Focus on overbought conditions in altcoins that have seen parabolic moves
• Watch for divergences between price and RSI on higher timeframes as potential short signals
• Be prepared to close shorts quickly if the overall market momentum remains strong

If Youre Uncertain

• Consider balanced strategies like cash-secured puts on Bitcoin to generate income while waiting for clearer direction
• Watch the $120,000 level on Bitcoin as a key psychological barrier that could provide clarity
• Pay attention to the US Dollar Index (DXY) – a bounce could signal a short-term top in crypto

Evolving Trading Guidance

What Changed

From 7d Ago

A week ago, focusing on Bitcoin was the safer play. Now, calculated risks on select altcoins offer potentially higher rewards.

From 14d Ago

Two weeks ago, caution was the name of the game. Now, the market is rewarding more aggressive, risk-on strategies.

Current Best Opportunities

Look for altcoins with strong fundamentals that haven't yet seen parabolic moves. Entries on pullbacks to support levels or breakouts from consolidation patterns could offer good risk/reward.

Approaches To Avoid

Avoid chasing pumps on low-cap altcoins without clear catalysts. The fear of missing out (FOMO) can be dangerous in such a heated market.

Timing Considerations

Shorter timeframes (4H and below) are showing the most volatility and opportunity. Consider being more active during US market hours when volume is highest.

Key Levels To Watch

Critical Thresholds

Bitcoin at $120,000 and Ethereum at $6,000 are major psychological levels that could determine the next leg of the rally

Recent Breakouts

Bitcoin breaking above $115,000 and Ethereum crossing $5,500 have opened the door for further upside

Approaching Tests

The S&P 500 is approaching 6,650, which could impact overall market sentiment if broken decisively

Final Advice

Main Takeaway

The crypto market is hot, but don't let FOMO cloud your judgment. Look for calculated entries on pullbacks rather than chasing parabolic moves.

Biggest Change

The rapid weakening of the US dollar is the most significant shift, creating a much more favorable environment for crypto compared to two weeks ago.

Risk Reminder

While the trend is your friend, remember that trees don't grow to the sky. Have a plan for taking profits and managing risk in case of a sudden reversal.