03/18 - Macro for Humans
Market Overview
Headline
Crypto Consolidates as Dollar Weakens: Accumulation Phase in Play
Summary
Bitcoin is stabilizing after a pullback, while the broader market shows signs of increased liquidity. A weakening dollar and falling bond yields are creating a more favorable environment for risk assets, including crypto.
Mood
Cautiously optimistic, like a spring coiled and ready to bounce
What Changed Recently
The US dollar's decline has accelerated, potentially easing pressure on crypto. Bitcoin has found support after its recent dip, suggesting accumulation.
Comparative Market Analysis
Vs 7 Days Ago
Stocks
The S&P 500 has bounced from recent lows, showing resilience. This improved risk sentiment is providing indirect support for crypto markets.
Dollar
The USD has weakened significantly, trading below all major EMAs. This dollar weakness typically boosts Bitcoin and crypto as a whole.
Interest Rates
The 10-year Treasury yield has dropped sharply, indicating looser financial conditions. This environment often favors risk assets like crypto.
Bitcoin Dominance
Bitcoin dominance is unchanged, suggesting a balanced market between BTC and altcoins.
Vs 14 Days Ago
Stocks
The S&P 500 remains in a bearish trend despite the recent bounce. This ongoing uncertainty in traditional markets may be keeping some investors cautious about crypto.
Dollar
The dollar's decline has intensified over two weeks, potentially setting up for a stronger crypto rally if the trend continues.
Interest Rates
Bond yields have fallen considerably, reflecting changing expectations about monetary policy. This shift typically supports both traditional and crypto risk assets.
Bitcoin Dominance
Bitcoin dominance has risen slightly, indicating a mild preference for BTC over altcoins in times of uncertainty.
Crypto Specific Trends
Current State
Bitcoin Vs Alts
Money seems to be favoring Bitcoin slightly as traders seek the relative safety of the largest crypto during market uncertainty.
Hot Sectors
With overall market caution, focus appears to be on major large-cap cryptos rather than specific alt sectors.
Volume And Activity
Trading volume is below average, suggesting a lack of strong conviction and pointing towards an accumulation phase.
Key Shifts
Week Over Week
Bitcoin has stabilized after its pullback, finding support around $80,000. This suggests the market is digesting recent gains rather than entering a deeper correction.
Two Week Trend
The crypto market has shifted from a strong uptrend to a consolidation phase, with decreased volatility and trading ranges tightening.
Notable Reversals
The sharp drop and rebound in bond yields indicate market uncertainty, which has translated to a more cautious approach in crypto trading.
What This Means For Traders
If Youre Bullish
- Look for accumulation setups, particularly around the $80,000 support for Bitcoin
- Wait for a break above the 20-day EMA at $85,500 as a potential confirmation of bullish momentum
- Consider scaling into positions during this consolidation, but keep position sizes smaller than during clear uptrends
If Youre Bearish
- Short-term traders might look for range-bound strategies between $80,000 and $88,000
- Watch for a potential break below $80,000 as a sign of further weakness
- Be cautious of the improving macro environment (weaker dollar, lower yields) which could quickly shift sentiment bullish
If Youre Uncertain
- Focus on major support/resistance levels for potential breakout trades
- Consider reduced position sizes or sitting out until a clearer trend emerges
- Watch the dollar index and bond yields for clues about broader market risk appetite
Evolving Trading Guidance
What Changed
From 7d Ago
The market has shifted from a clear uptrend to a consolidation phase, requiring more patience and precision in entries.
From 14d Ago
Momentum has slowed considerably, changing the optimal approach from trend-following to range-trading or accumulation strategies.
Current Best Opportunities
Look for accumulation setups near support levels, particularly for Bitcoin. Range-bound strategies between key levels may also be effective.
Approaches To Avoid
Avoid aggressive trend-following or momentum trades until a clearer direction is established.
Timing Considerations
This may be a time for longer-term positioning rather than short-term trades. Consider extending your timeframes and focusing on daily/weekly charts.
Key Levels To Watch
Critical Thresholds
For Bitcoin, $88,000 resistance and $80,000 support are the key levels defining the current range.
Recent Breakouts
The DXY breaking below its major EMAs signals a significant shift in dollar strength.
Approaching Tests
Bitcoin is approaching a test of its 20-day EMA at $85,500, which could provide clues about short-term momentum.
Final Advice
Main Takeaway
Use this consolidation phase to accumulate carefully while managing risk, as improving macro conditions could set up the next leg higher.
Biggest Change
The shift from a clear uptrend to a consolidation phase requires adapting your trading style for less directional movement.
Risk Reminder
While conditions are improving, uncertainty remains high. Keep position sizes modest and be prepared for sudden shifts in either direction.