12/17 - Macro for Humans

Market Overview

Headline

Dollar Weakness Sparks Crypto Curiosity, But Bitcoin Hesitates

Summary

Global markets are showing a risk-on appetite as the US dollar weakens. However, Bitcoin is bucking the trend, struggling to capitalize on the favorable macro environment. This disconnect is creating an interesting dynamic for crypto traders.

Mood

The market feels like a party where Bitcoin forgot to RSVP. There's excitement in the air, but also confusion about the guest of honor's absence.

What Changed Recently

The most notable shift is the accelerating weakness in the US dollar, which typically benefits crypto. Yet Bitcoin's lack of positive response is raising eyebrows.

Comparative Market Analysis

Vs 7 Days Ago

Stocks

The S&P 500 has gained strength, up 1.7% and comfortably above key moving averages. This risk-on sentiment should be supportive for crypto, making Bitcoin's weakness even more puzzling.

Dollar

The US dollar has significantly weakened over the past week. This usually acts like rocket fuel for crypto prices, but Bitcoin isn't taking off – yet.

Interest Rates

Bond yields have crept slightly higher but remain range-bound. The stable interest rate environment isn't providing any obvious headwinds for crypto.

Bitcoin Dominance

Bitcoin dominance has remained surprisingly stable despite the favorable macro backdrop. This suggests a standoff between Bitcoin and altcoins, with neither gaining a clear advantage.

Vs 14 Days Ago

Stocks

The stock market's bullish trend has solidified over the past two weeks, with the S&P 500 showing consistent gains. This sustained risk appetite makes Bitcoin's lackluster performance even more notable.

Dollar

The dollar's decline has accelerated compared to two weeks ago, creating an even more crypto-friendly environment. Bitcoin's failure to capitalize on this is a significant departure from historical patterns.

Interest Rates

Interest rates have remained relatively stable over the past 14 days, maintaining a neutral backdrop for crypto. The lack of major shifts here suggests other factors are influencing Bitcoin's behavior.

Bitcoin Dominance

Bitcoin dominance has been treading water for two weeks, indicating a prolonged period of indecision in the crypto market. This stalemate is unusual given the clear directional moves in other markets.

Crypto Specific Trends

Current State

Bitcoin Vs Alts

Right now, it's as if both Bitcoin and altcoins are waiting for the other to make the first move. Neither is showing clear leadership, creating a somewhat tense standoff.

Hot Sectors

With Bitcoin struggling, traders are cautiously exploring altcoin opportunities. DeFi and Web3 projects are seeing increased interest as investors seek alternatives to BTC's underperformance.

Volume And Activity

Trading volume for Bitcoin is below average, suggesting a lack of conviction from both buyers and sellers. It's like everyone's waiting for a clear signal before committing.

Key Shifts

Week Over Week

The most striking change is Bitcoin's failure to rally despite increasingly favorable macro conditions. This disconnect has grown more pronounced over the past week.

Two Week Trend

Over the past 14 days, we've seen a clear divergence emerge between global risk appetite and Bitcoin's performance. This unusual behavior is forcing traders to rethink established correlations.

Notable Reversals

The relationship between dollar weakness and Bitcoin strength appears to have temporarily broken down. This is a significant shift that demands close attention from traders.

What This Means For Traders

If Youre Bullish

• Look for signs that Bitcoin is finally responding to the positive macro environment. A break above $90,000 could signal a delayed but powerful move.
• Wait for an uptick in trading volume to confirm growing bullish conviction.
• Consider setting tight stop losses, as the disconnect with broader markets could lead to unpredictable moves.

If Youre Bearish

• Focus on Bitcoin's inability to rally despite favorable conditions. A drop below $85,000 could trigger further selling.
• Watch for any signs of the dollar stabilizing, which could remove a key support for crypto.
• Be prepared for a potential sharp reversal if Bitcoin suddenly aligns with macro trends. Use scaled entries for shorts rather than going all-in.

If Youre Uncertain

• Consider trading smaller position sizes until Bitcoin's relationship with the dollar and stocks normalizes.
• Pay close attention to the $85,000 support and $90,000 resistance levels for clues about future direction.
• Look for a significant increase in trading volume as a sign that the market is breaking out of its indecision.

Evolving Trading Guidance

What Changed

From 7d Ago

A week ago, following dollar weakness was a reliable strategy. Now, traders need to be more cautious and look for confirmation from Bitcoin itself.

From 14d Ago

Two weeks ago, the crypto market was more closely aligned with traditional risk assets. Today, that relationship has weakened, requiring a more nuanced approach.

Current Best Opportunities

The disconnect between macro conditions and Bitcoin's price action creates potential opportunities in select altcoins. Look for projects with strong fundamentals that are outperforming BTC.

Approaches To Avoid

Avoid making large directional bets on Bitcoin based solely on dollar weakness or stock market strength. The usual correlations are currently unreliable.

Timing Considerations

This is a market that favors patient, observant traders. Be prepared to act quickly when Bitcoin finally shows its hand, but don't force trades in the meantime.

Key Levels To Watch

Critical Thresholds

For Bitcoin, the $90,000 resistance is crucial. A decisive break above this level could signal that BTC is finally aligning with the broader risk-on sentiment.

Recent Breakouts

The DXY (dollar index) has broken below several key support levels in the past week, highlighting the significance of its ongoing weakness.

Approaching Tests

Bitcoin is approaching a test of the $85,000 support level. How it reacts here could set the tone for the coming weeks.

Final Advice

Main Takeaway

Stay alert but patient. The unusual disconnect between Bitcoin and favorable macro conditions is likely to resolve soon, potentially leading to significant price action.

Biggest Change

The breakdown in Bitcoin's typical response to dollar weakness is the most significant shift from the past two weeks. This demands a recalibration of trading strategies.

Risk Reminder

In this uncertain environment, position sizing is crucial. Don't let the fear of missing out lead you to overcommit before Bitcoin's intentions become clear.