Market Update: What You Need to Know (25 September to 01 October)

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
  • Tuesday
    • 1000 ET: [USD] Consumer Confidence
    • 1000 ET: [USD] New Home Sales
  • Wednesday
    • 0830 ET: [USD] Core Durable Goods
    • 1030 ET: [USD] Crude Oil Inventories
  • Thursday
    • South Korea: Holiday
    • 0800 ET: [EUR] German Consumer Price Index (CPI)
    • 0830 ET: [USD] Gross Domestic Product (GDP)
    • 0830 ET: [USD] Initial Jobless Claims
    • 1600 ET: [USD] Fed Chair Powell Speech
  • Friday
    • China: Holiday
    • 0200 ET: [GBP] GDP
    • 0500 ET: [EUR] CPI
    • 0830 ET: [USD] Personal Consumption Expenditure (PCE) Index

Bitcoin Indecision Prevails

Summary: Largely unchanged from last week: It feels like we’ve been here before, and we have – Bitcoin indecision. It is unlikely to give a definitive direction this year, unless the regulatory climate is clarified, or the macro outlook improves. While we are likely near peak US interest rates, there is room to climb a little higher, which would squeeze the dollar higher and crypto markets lower. This is why I recommend Dollar Cost Averaging (DCA) into crypto this year, you won’t get left behind and you avoid the chop that comes with trading.

The US Dollar Index (DXY) continues a gradual rise, on the back of “higher for longer” interest rates and hawkish chatter from the US Federal Reserve. Make no mistake, they are approaching the end state of this hiking cycle, but they will squeeze as much demand from US markets as possible, before relaxing.

This means the DXY will continue to flirt with a final move up, but unlikely to set new highs. The DXY was up just under 1.5% last week, and Bitcoin held up fairly well, with a decline of only 5% at peak. Bitcoin remains in the uptrend channel it’s traded in since March 2023.

Bitcoin Levels: $30k marked the most important support level in 2021’s bull market, and is the most important resistance to overcome in 2023. Several rejections from $30k since Q2 2023 add to the importance of $30k. Looking at the weekly chart:

  • Immediate resistance: $26,500
  • Immediate support: ~$25,600
  • Current value range: $25,800 to $29,200
  • Support levels:
    • $26,300
    • $25,000
    • $24,450
    • $22,200
    • $20,900
    • $20,400
  • Resistance levels:
    • $27,400
    • $27,100 (21w EMA)
    • $29,044
    • $30,600
    • $31,300-$32,000
    • $34,000-$36,500
    • $37,500
    • $40,000

Bull Perspective: Last week’s breakdown and any further decline remains an opportunity for momentum and sentiment reset. Bulls were exhausted at $30k, and while it can take time to recover, this retreat to a lower prices brings in more buyers and interest. It means a consolidation in this range can reverse into a new rally. The right news may also spark a reversal of sentiment and subsequent rally, such as a Bitcoin ETF approval, or additional regulatory clarity from the US Government.

Bear Perspective: A bullish reversal over the next month cannot be ruled out, but this writer’s bias continues to be weakly bearish pending the interest rate decision or regulatory news. Momentum indicators on the weekly, such as TSI or RSI, also reflect a bearish momentum that hasn’t quite bottomed. $20k to $22k remain in reach, but is only marginally lower than current prices and will offer a great dollar-cost-average (DCA) opportunity for patient traders. DCA strategy also means that if this consolidation under $30k leads to a breakout, you won’t be left behind.

US Dollar Index (DXY)

The Dollar Index showed some short term strength through September, due to an indecisive but decidedly more hawkish US Fed, coupled with a struggling Euro. With the last FOMC confirming the US Fed intent on continuing with “higher for longer” interest rates, the DXY gained 1.5%, while crypto markets logged moderate drops in response.

The DXY nearly lost it’s most important support level between 100 and 101, but recently recovered to resistance around 106. Overlaying a Schiff Pitchfork, the DXY is barely clinging to the top channel, and any loss of the key support around 100 to 101 will correspond with a movement to the next lower channel, likely signaling a more prolonged downtrend.

From a technical perspective, the DXY is flirting with downside continuation; but entering the final stage of the current hiking cycle as the US Fed maintains a hawkish outlook as long as possible, we may see a prolonged “dead cat bounce” for the Dollar as the US Fed tries to thread the needle in squeezing demand but avoiding a recession. Historically over the past 50 years, losing support along 101 led to multi-month to multi-year downtrends.

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

While things look up from late last year, there remains a pronounced uncertainty in the macroeconomic forecast, and regulatory climate. This is reflected in September’s sentiment low being 30, and this week flirting with 47 with little appreciable change in the macro or regulatory climate.

Its likely we see sentiment oscillate between 30 and 50 for the foreseeable future.

An ETF approval likely lead to improved sentiment and 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.


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