04/13 - Macro for Humans
Market Overview
Headline
Dollar Dives, Treasuries Surge: Bitcoin Consolidates as Market Sentiment Shifts
Summary
Global markets are in flux as the US dollar weakens significantly and Treasury yields spike. Bitcoin holds steady amidst the turbulence, while altcoins face pressure. Traders are navigating a complex landscape of changing correlations and risk appetites.
Mood
The market feels like a seesaw right now – unstable and prone to sudden shifts. There's a sense of unease as traditional relationships between assets are being tested.
What Changed Recently
The most dramatic shift is the sharp decline in the US dollar, coupled with a surge in Treasury yields. This unusual combination is creating ripple effects across all markets, including crypto.
Comparative Market Analysis
Vs 7 Days Ago
Stocks
The stock market has taken a bearish turn compared to last week, but is showing early signs of a potential reversal. This instability is keeping crypto traders cautious, with a preference for Bitcoin over riskier altcoins.
Dollar
The USD has weakened significantly in the past week, typically a positive for crypto. However, the speed of the decline is causing some concern about broader market stability.
Interest Rates
Treasury yields have surged dramatically, indicating expectations of higher interest rates. This usually pressures crypto, but the weak dollar is offsetting some of that negative impact.
Bitcoin Dominance
Bitcoin's market dominance has increased over the past week, suggesting traders are seeking its relative safety within the crypto space as broader markets wobble.
Vs 14 Days Ago
Stocks
Two weeks ago, stocks were in a more stable uptrend. The recent volatility marks a significant shift in risk appetite that's spilling over into crypto markets.
Dollar
The dollar's decline has accelerated sharply from two weeks ago. This longer-term trend is generally supportive for crypto prices, but the rapid change is causing some short-term uncertainty.
Interest Rates
Interest rate expectations have shifted dramatically in just two weeks. The market is now pricing in a much more hawkish Fed, which could challenge the crypto bull narrative if it continues.
Bitcoin Dominance
Bitcoin has been steadily gaining market share over the past two weeks, indicating a persistent shift towards caution within the crypto space.
Crypto Specific Trends
Current State
Bitcoin Vs Alts
Money is clearly flowing into Bitcoin over altcoins right now. It's like everyone's running to the safest house on the block as the weather gets stormy.
Hot Sectors
DeFi and Layer-1 alternatives to Ethereum are seeing the most interest, likely due to their perceived value in a high-interest rate environment.
Volume And Activity
Trading volume is declining, telling us that conviction is low. It's like the market is holding its breath, waiting to see how these macro shifts play out.
Key Shifts
Week Over Week
The biggest change is the market's risk appetite. A week ago, traders were more willing to speculate on altcoins. Now, there's a clear flight to quality within crypto.
Two Week Trend
Over two weeks, we've seen a steady increase in Bitcoin dominance and a growing correlation between crypto and traditional finance moves.
Notable Reversals
The stock market's recent bounce is the most notable reversal. If it continues, it could reignite risk appetite in crypto markets.
What This Means For Traders
If Youre Bullish
- Look for setups on Bitcoin and top-tier altcoins that are holding up well in this chop
- Wait for a clear break above $88,000 on Bitcoin before adding to long positions
- Consider using options to limit downside risk while maintaining upside exposure
If Youre Bearish
- Focus on weaker altcoins that are underperforming Bitcoin for potential shorts
- Watch for a break below $80,000 on Bitcoin as a signal to increase short exposure
- Be prepared for sudden short squeezes if the stock market continues to bounce
If Youre Uncertain
- Stick to trading a smaller size and focus on high-probability setups with clear invalidation levels
- Keep a close eye on the $85,000 level on Bitcoin – a decisive move either way could signal the next trend
- Watch for a stabilization in the US dollar as a sign that crypto might find clearer direction
Evolving Trading Guidance
What Changed
From 7d Ago
A week ago, altcoin trading was more viable. Now, the focus should be on Bitcoin and only the strongest altcoins.
From 14d Ago
Two weeks ago, longer-term trend trading was working well. The current environment favors shorter timeframes and more nimble trading.
Current Best Opportunities
The safest approach is trading Bitcoin's range between $80,000 and $88,000. For those seeking higher risk/reward, look for oversold bounces on quality altcoins showing strength relative to Bitcoin.
Approaches To Avoid
Avoid trying to catch falling knives on weaker altcoins or making large directional bets given the macro uncertainty.
Timing Considerations
Shorter timeframes (4h and below) are ideal right now. Be more active during US market hours when we're seeing the biggest moves in traditional markets spill over to crypto.
Key Levels To Watch
Critical Thresholds
Bitcoin's $80,000 support and $88,000 resistance are the key levels to watch. A break of either could trigger significant moves across the entire crypto market.
Recent Breakouts
The DXY breaking below 100 and 10-year yields breaking above 5% are the most important recent breaks to be aware of.
Approaching Tests
Keep an eye on the S&P 500 approaching its 50-day moving average from below – this could be a pivotal test for overall risk sentiment.
Final Advice
Main Takeaway
Stay nimble and prioritize capital preservation. The unusual macro environment requires extra caution and smaller position sizes.
Biggest Change
The simultaneous drop in the US dollar and spike in yields is the most significant shift, creating a uniquely challenging environment for all markets.
Risk Reminder
Remember, in times of high uncertainty like this, no single trade is worth risking your overall account health. Stay patient and wait for high-conviction setups.