I was waiting on more clarity in macro and looking at how the stock market will react to FED decisions and general sentiment, while BTC was doing its own thing raging upwards like probably no one expected in the meantime hitting new ATH well before the next halving.
I hope most of you took profits as Bitcoin has been overbought for a while now and as I will show later, all metrics screaming it is time for Bears to slowly take over the market.
Meme Season
Some started calling for an alt season (time in crypto market where funds from profits in BTC start flowing into lower mcaps) after BTC hit new ATH, but all we got was a “meme season” with meme tokens on SOL and AVAX leading the way, causing both of those coins surging in price very quickly with memes like BOME on Solana or COQ on Avax bringing huge gains for those that were lucky enough to get in early.
I would hope that those chains have more to offer in the future than use cases to host thousands of meme tokens that people get scammed most of the time.
Worth noting though for the future when the next cycle’s real bull run kicks off, that meme coins and tokens will be where a lot of money will flow into apart from legitimate blockchain projects and those that survive till then could bring you some profits, so do keep track of those most popular
None of that diminished Bitcoin’s dominance in the market and we have never had a real alt season before a halving and I am fairly sure we won’t have one now either with BTC’s dominance climbing closer to 58-60%.
As always after crypto market had a good run up it is worth reviewing your alt coins shortlist (if you have one) and checking how much each moved. This is always a good indicator of how well that coin/token should perform when the real bull run kicks off.
Macro vs Risk On Assets
Time for a quick look at boring macro sentiment, how the stock market keeps ignoring it and whether Bitcoin decoupled from it all.
With this week’s FOMC meeting and recent week’s data on inflation, highly anticipated interest rate cuts are not coming as market expected.
As you can see earliest cut expected currently is in June and that is highly dependent on CPI/PCE data, if these go up, I highly doubt we will see a cut as early as June. It all feels forced anyway, likely due to 2024 being Election year in the USA. One of main FED’s main mandates is getting inflation down to 2% and keep it there, since it has not happened yet, why cut rates? Only reason would be if something breaks in US economy, but apparently, all is good. No wonder then that the Stock Market mainly ignored FOMC meeting and went slightly up, regardless of the fact that apparently the priced in number of rate cuts was north of 5, so why no correction yet?
Looking at weekly chart of Nasdaq, we can clearly see a bearish divergence forming that will like resolve itself in a larger correction over the next 4-6 weeks with most likely support around 14350.
Historically when FED cut interest rates, we have seen a run up in stocks for a relatively short period of time before a large drop due to one or the other economic crisis. I think this time will be the same, so keep that in mind if you are going to ride with the bulls.
Highly recommend reading this summary of historical rate hikes/cuts by FED. Read More
Also check this quick summary on emergency bank liquidity that has finished on March 11th, if its to play out like 2008 and 2020, the stock market big sell off is just around the corner. Read More
Another thing to note is BOJ rising interest rates out of negative territory and that always meant trouble in the past, although any ramifications were only seen in the risk on assets many months after, so that could even mean only materializing in 2026.
Finally on Bitcoin decoupling from traditional markets as some started to float around again during this latest run up to new high. This simple chart below shows clearly that BTC’s price is behaving same as leveraged QQQ (Nasdaq ETF) and there are absolutely no signs of decoupling. It might move at slighlty different moments in time if you zoom in, but ultimately it is no safe haven for any crisis that could hit traditional risk on assets. Keep that in mind and do not be surprised to see BTC’s price going down hard if the Stock market tanks next time.
Outlook for Bitcoin
Spot ETFs have been fueling this recent run up to new high, but this week has seen some larger outflows, especially from GBTC. You can see below the average purchase cost is quite close to current price of $63,000 and I think we will see very soon how strong ETF holders are when price goes below that purchase cost of $57,500.
With other indicators for technical and onchain pointing to a stronger correction in price in last few days, I strongly believe it already started with a bearish weekly candle close last week and pretty much guaranteed continuation candle close on Sunday.
First support being around $52,000 is the most likely target, but I would not rule out 38-44k range especially if CPI data in April comes in hot and the stock market indexes fall. The 25-30k range is possibly something we could see if FED does not cut at all this year or if something else breaks.
Now let’s have a closer look at other bearish indicators.
Fear and Greed Crypto Index
Dropping slowly from the high of 90, when BTC was above $68,000 and taking some profits was a good idea. Currently at 75, so still a value I consider a take profit territory and it will likely not stay that for too long.
Onchain Metrics
NUPL has been trending with this strong move in Bitcoin’s price and is now in hot territory as it was in 2019 and 2021, clearly indicating a solid correction is to be expected. You can read more in my CryptoQuant article Here, that was posted few days before current move down started.
SOPR is yet another metric from my usual checklist, that has flagged a high probability of correction in price incoming, again I highly recommend reading full synapsis Here
Another onchain metric that flagged bit earlier when BTC was at $72,000 was Funding rates (extremely positive for a long time always lead to a price correction)
Maybe I am overly bearish, but it is hard to ignore the signs of larger correction incoming. For all those readers that are hoping for an alt season, you have to be patient, for not BTC will keep dominating and I think BTC’s dominance will go further up towards 60% in coming months especially with next halving around the corner. Then again I said the same about BTC’s new ATH not coming anytime soon and yet we just had it, so…
My next newsletter will likely be closer to halving, as I have some interesting analysis in the works, next cycle timelines and a follow up to S2F ratio that predicted BTC’s price falling to at least $16,700. After halving, I will be able to get a more accurate prediction for BTC’s price during next cycle’s bull run. Stay tuned!!