11/20 - Macro for Humans
Market Overview
Headline
Dollar Flexes, Bitcoin Flinches: Navigating Choppy Waters in Crypto
Summary
The strengthening US dollar is putting pressure on risk assets, including crypto. Bitcoin has broken below key support levels, while the broader market shows signs of uncertainty. Traders are facing a more challenging environment compared to two weeks ago.
Mood
Cautious and slightly defensive. It's like the market is bracing for impact, but unsure how big the wave will be.
What Changed Recently
Bitcoin broke below major support levels, the dollar continued its upward climb, and stock market sentiment turned more bearish.
Comparative Market Analysis
Vs 7 Days Ago
Stocks
The S&P 500 has turned bearish, down 2.34% and below key moving averages. This risk-off mood is likely contributing to crypto's weakness.
Dollar
The USD has gained strength over the past week, putting pressure on Bitcoin and other cryptocurrencies as investors seek safety.
Interest Rates
Treasury yields are up 10-15 basis points, indicating slightly tighter financial conditions that could be weighing on crypto enthusiasm.
Bitcoin Dominance
Bitcoin dominance has remained relatively stable, suggesting the current downturn is affecting both Bitcoin and altcoins similarly.
Vs 14 Days Ago
Stocks
The stock market's shift from bullish to bearish over two weeks has significantly dampened risk appetite, creating headwinds for crypto.
Dollar
The dollar's two-week surge represents a notable shift in global liquidity, making the environment much less favorable for crypto compared to mid-November.
Interest Rates
The upward creep in yields over two weeks, while not dramatic, has contributed to a less crypto-friendly backdrop as the cost of capital inches higher.
Bitcoin Dominance
A slight decrease in Bitcoin dominance over two weeks hints at a subtle shift towards altcoins, despite overall market weakness.
Crypto Specific Trends
Current State
Bitcoin Vs Alts
Neither Bitcoin nor altcoins are showing clear strength. It's like two boxers both on the ropes – no one's winning, but Bitcoin's taking slightly harder hits.
Hot Sectors
Defensive plays and stablecoins are seeing increased interest as traders look to weather the storm.
Volume And Activity
Increasing volume on down days suggests growing conviction among sellers, but we're not seeing panic... yet.
Key Shifts
Week Over Week
Bitcoin breaking below major support levels is the week's big story, potentially opening the door to further downside.
Two Week Trend
We've seen a clear shift from cautious optimism to defensive positioning over the past two weeks as macro headwinds intensified.
Notable Reversals
The stock market's bearish turn stands out, as it was holding up better two weeks ago and providing some support for crypto sentiment.
What This Means For Traders
If Youre Bullish
- Look for oversold bounces, particularly if Bitcoin approaches the $87,500 support level
- Wait for a clear break and hold above the recently lost support (now resistance) levels before entering longer-term positions
- Consider scaling into positions slowly rather than going all-in, given the uncertain environment
If Youre Bearish
- Potential shorts on rallies to previously broken support levels, which may now act as resistance
- Watch for failed bounces or weak volume on upward moves as potential entry signals
- Keep an eye on the dollar index – further DXY strength could add fuel to crypto bearish moves
If Youre Uncertain
- Focus on range-trading strategies between newly established support and resistance levels
- Pay close attention to the $90,000 and $87,500 levels on Bitcoin for clues about near-term direction
- Watch for a potential shift in dollar strength or stock market sentiment as catalysts for a clearer crypto trend
Evolving Trading Guidance
What Changed
From 7d Ago
A week ago, dip-buying was more attractive. Now, traders need to be more cautious about catching falling knives.
From 14d Ago
Two weeks ago, the trend was your friend. Now, trend-following strategies need to be adjusted for choppier, more bearish conditions.
Current Best Opportunities
Short-term mean reversion trades and carefully managed swing trades aligned with the new downtrend offer the best risk/reward.
Approaches To Avoid
Avoid aggressive long-biased strategies or assuming oversold conditions alone will trigger major bounces.
Timing Considerations
Shorter timeframes are favored in this choppy environment. Be ready to take profits quickly and cut losses early.
Key Levels To Watch
Critical Thresholds
For Bitcoin, $87,500 is now the key battleground. In the broader market, watch the DXY 100 level as a potential accelerant for risk-off moves.
Recent Breakouts
Bitcoin breaking below $95,000 and $90,000 has shifted the technical landscape significantly bearish.
Approaching Tests
The S&P 500 is approaching its 200-day moving average, a break below which could spark more crypto selling.
Final Advice
Main Takeaway
Stay defensive but alert. This is a time for caution, not panic. Opportunities will emerge from this volatility for patient traders.
Biggest Change
The breakdown below key Bitcoin support levels is the fortnight's most significant shift, altering the short-term trading landscape.
Risk Reminder
Volatility cuts both ways. While the trend is bearish, oversold bounces can be sharp. Always use stop-losses and avoid overleveraging in these conditions.