Market Update: What You Need to Know (22-28 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
    • All Day: Holiday in India
  • Tuesday
    • Nothing to report
  • Wednesday
    • 0945 ET: [EUR] Manufacturing Purchasing Managers Index (PMI)
      • Forecast: 48.0
      • Previous: 47.9
    • 1000 ET: [USD] BoC Interest Rate Decision
      • Forecast: 5%
      • Previous: 5%
  • Thursday
    • 0815 ET: [EUR] ECB Interest Rate Decision
      • Forecast: 4.5%
      • Previous: 4.5%
    • 0830 ET: [USD] Gross Domestic Product
      • Forecast: 2%
      • Previous: 4%
    • 0830 ET: [USD] Initial Jobless Claims
      • Forecast: 200k
      • Previous: 187k
  • Friday
    • 0830 ET: [USD] Personal Consumption Expenditure (PCE) Index
      • Forecast: 3% (YoY); 0.2% (MoM)
      • Previous: 3.2% (YoY); 0.1% (MoM)
    • All Day: Holiday in Australia and India

Bitcoin – Welcome to the Post-ETF World

Summary: In more terms of price action – price over $35k is high-timeframe (HTF) bullish, and over $32k is healthy. Don’t overthink it, and as long as we are under previous highs, we are in a good place to stack and wait. I’ll revisit HTF thoughts if we close a monthly under $32k. If you are curious about reasons for the short-term muted to bearish price action, scroll down to Market Sentiment.

Semantics: Sentiment remains overall positive, the Bitcoin ETFs are by most measures, very successful, and now the SECOND LARGEST ETF commodity in the US after Gold. Also 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: $40,600
  • Current value range: $40,400 to $44,800
  • Local support levels:
    • $40,600
    • $40,000 psychological & correlates with 2021 & 2017 levels
    • $38,482
    • $37,142
    • $36,800 (21w EMA)
    • $36,043
    • $35,700
    • $35,000
    • $34,271
    • $33,000
  • Local resistance levels:
    • $41,600
    • $42,156
    • $43,200
    • $44,900
    • $45,300
    • $45,400
    • $45,800
    • $48,991
    • $52,619

Bull Perspective: For the first time in crypto history, we see legitimacy, courtesy of ETFs that now rank as the second largest ETF commodity after Gold. 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 macroeconomic data comes back as weaker than expected, the US Fed can reconsider their retreat from peak rates, and even raise them further. Senator Warren and other leading Democrats appear poised to continue an anti-crypto narrative into the next election cycle, potentially stifling investor appetite and bringing more divisive politics to the crypto markets. Also “sell the news” on ETFs?

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 buy more.

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 ~101 level, arguably the most significant for the DXY. Almost every time in the past 50 years, when DXY rejected from, or closed under the 101 range, it led to a prolonged period of weakening dollar.

We continue to find the DXY on the cusp of losing 101, and if the Fed reduces rates several times in 2024, that will be the catalyst to send it 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

On higher timeframes, it is clear the market sentiment is shifting, with growing confidence in the economic recovery, ETF approvals, and the worst of the bear market behind us.

We are currently oscillating around neutral sentiment with a weak greedy bias on fear and greed index (current sentiment is ranging between 50 and 60 this week.

Short term, we are observing a fading bullish optimism, due to the muted to bearish short-term price action following the ETF approval. That appears to be driven by a combination of Grayscale selling some of their massive Bitcoin holdings (including $1 billion of FTX’s GBTC), a ‘sell the news’ event on the ETF launches, and a relief rally by the USD Dollar (DXY) which generally stifles risk assets like crypto. In my opinion these are short term distractions, and the market is quite healthy.

Senator Warren’s anti-crypto bill, and [some] Democrat posturing around crypto, could shift the narrative to a negative tone as the election cycle ramps up. It’s unlikely to stick but introducing political bias to cryptocurrency could lead to other unforeseen issues.

Note: Remember Bitcoin, Ethereum, cryptocurrency is apolitical; its designed by and for the people. Governments, banks, funds, they are tourists here.


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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