Market Update: What You Need to Know (08-14 January)

Crypto & Economic Calendar

The events below inform governments, corporations, traders and investors on the health of the economy. I only list events noted as “high volatility expected” in related markets.

  • Monday
    • Nothing to report
  • Tuesday
    • Nothing to report
  • Wednesday
    • 1030 ET: [USD] Crude Oil Inventories
  • Thursday
    • 0830 ET: [USD] Consumer Price Index (CPI)
      • Forecast: 0.2% (MoM); 3.2% (YoY)
      • Previous: 0.1% (MoM); 3.1% (YoY)
    • 0830 ET: [USD] Core CPI
      • Forecast: 0.2% (MoM)
      • Previous: 0.3% (MoM)
    • 0830 ET: [USD] Initial Jobless Claims
      • Forecast: 201k
      • Previous: 202k
  • Friday
    • 0200 ET: [GBP] Gross Domestic Product (GDP) Nov (MoM)
    • 0830 ET: [USD] Producer Price Index (PPI)

Bitcoin – Happy New Year – ETFs on the Horizon?

Summary: Bitcoin entered 2024 with a measured indecision along the ~$45k range of resistance. In my opinion this is a short term indecision due to pending Bitcoin ETFs in the US. ETFs appear on track for approval in Q1, and in my opinion, its unlikely they will be outright denied. They could potentially be delayed which may trigger short term volatility. In more terms of price action – price over $35k is bullish and over $32k is healthy. Don’t overthink it, as long as we are under previous highs, we are in a good place to stack and wait.

Semantics: Sentiment remains overall positive, and the Bitcoin ETFs appear on their route to approval, suggesting the crypto lobby is offering a strong counterpoint to the banking and anti-crypto lobby somewhat led by Senator Warren. While there is always that existential risk of oppressive crypto regulation, I’m comfortable betting future regulations won’t be as heavy-handed, and I will continue to double-down on red days until we approach previous highs.

  • Immediate resistance: $45,000
  • Immediate support: $43,966
  • Current value range: $42,300 to $49,000
  • Local support levels:
    • $43,200
    • $42,700
    • $41,600
    • $40,501
    • $40,600
    • $38,482
    • $37,142
    • $36,800 (21w EMA)
    • $36,043
    • $35,700
    • $35,000
    • $34,271
    • $33,000
  • Local resistance levels:
    • $44,900
    • $45,300
    • $45,400
    • $45,800
    • $48,991
    • $52,619

Bull Perspective: For the first time in crypto history, we see legitimacy on the horizon, if the Bitcoin ETFs are approved, and Ethereum follows. Compound that with the relaxing macroeconomic conditions, with some analysts predicting as much as 100bp reduction in rates in 2024, and a bullish storm is brewing for 2024 into 2025.

Bear Perspective: If any macroeconomic data comes back as less healthy than expected, its still not too late for the Fed to retreat from their idea of peak rates, and even raise it further. And while a continued upside move is possible for Bitcoin in coming weeks, its unlikely we see institutional money enters the market in size before the SEC issues a Bitcoin ETF. Senator Warren appears poised to continue on an anti-crypto narrative for the next election cycle, potentially stifling investor appetite.

Bottom line: Should you buy? Bitcoin remains under it’s previous high, historically that means you have time to stack crypto. Don’t wait, develop a dollar cost average (DCA) strategy you are comfortable with, and begin to buy now before institutions do.

Note: why do I rarely cover other coins and tokens on this weekly newsletter? As a cycle trader, I look at Bitcoin as a proxy for the larger crypto market. It drives the cycles that everything else follows, so by understanding Bitcoin, I understand the cycle at large. I do buy and hold altcoins, with my largest allocations in Ethereum and Bitcoin Layer-2 like Stacks.

US Dollar Index (DXY)

In the past two years I discussed the inverse relationship between the strength of the US Dollar (DXY) and speculative markets like crypto and equities. Of particular importance, the key ~101 level, arguably the most significant for the DXY. Almost every time in the past 50 years, when DXY rejected from, or closed under that level, it led to at least a prolonged period of weakening dollar.

Once again we find the DXY on the cusp of losing 101, and if the Fed reduces rates several times in the coming year, that will send the DXY even lower. An intermediate target for such a breakdown is around 96. After years of watching the DXY, this man will throw a party when it finally loses 101.

Why do we care about the DXY?

The Dollar Index is a complex financial data point, a lot of external factors impact its value. But in the simplest terms, you can look at the relationship between DXY and risk assets like Bitcoin simply – they usually move inverse to each other. When DXY is up, BTC is down; and the opposite is true.

Market Sentiment

It is clear the market sentiment is shifting, with growing confidence in the economic recovery, Bitcoin ETF approvals, and Ethereum following it in 2024, and with the worst of the bad news behind us in terms of bad players like FTX and the SBF trial.

Senator Warren’s anti-crypto bill has a chance to shift the crypto narrative to a more negative tone into early 2024, but it’s unlikely to stick and once the bill is defeated, and once the ETFs are live.

We are currently oscillating around neutral with a greedy bias on fear and greed index (current sentiment is firmly neutral at 50, but greed is rising.

An ETF approval will likely lead to improved long term sentiment and more sustained greed across Bitcoin and crypto markets. Further boosts to market sentiment will follow if the US Fed declares a pause on rates, peak rates, or if a recession is confirmed avoided.


New SEC rules go into effect in January 2024 that address short selling manipulation in markets:

  • Require institutional investors to report gross short positions monthly & activity by date
  • Require parties in stock lending to report info about the loans.

This coincides with Department of Justice (DoJ) and SEC investigation into market manipulation by short sellers and hedge funds. It will be interesting to see how funds react, and how the meme traders respond in turn. With markets likely recovering, there may be an opportunity for a repeat of the 2021 meme stock mania like we saw with GME or AMC.


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