The Crypto Market Dynamics and BreakdownA brief overview of BTC , TOTAL, TOTAL2 , USDT dominance, USDC dominance and DXY (dollar strength index).
So guys, i thought id post an update on the most recent crypto market developments, i plan to push out a video alongside this too to break it down in depth but heres what im seeing developing so far.
Ive correlated 6 charts that i think are worth looking at on a whole to get an idea of market wide developments. BTC , the driver of the market direction. Stablecoin dominance pairs, showing the relationship of money flow in and out of stablecoins back into the market (highly correlated with reversals), TOTAL and TOTAL2 , the total crypto market caps for ALTS and for BTC and ALTS to see overall bullish / bearish intensions, and the DXY (dollar strength index) which has been known to work inversely with BTC market reversals. E.g, when DXY is pumping, crypto is correcting and vice versa.
I think at present theres more downside risk than upside potential having cleared the charts and looking at the in a new perspective. I am still longer term bullish until we break and close below 28K which would confirm a new LL, breaking the range we've been in for the last year and invalidating any bullish momentum. However at current we have put in a new HH on TOTAL and TOTAL 2 and respecting the swing low so things remain to be bullish based on HTF structure for both marketcap pairs. That being said it seems as though we have been generating liquidity on both the buy and sell side on BTC , where due to having an inefficiency to fill to the left, price has nothing to liquidate as there is no structure to target to run stop losses. Therefore, what we have been developing is this upwards bearish flag formation after coming into HTF weekly demand. Buyers have shown presence with higher volume coming in at the lows and respecting an uptrend, but with the intension to mitigate the HTF supply above taking out the sell side liquidity and now targeting the buy side liquidity, sweeping the first low we have put in within the weekly demand range to target the extreme demand range on the weekly and daily timeframes. This would have induced both buyers and sellers into the market to liquidate them all enabling a capitulation event to take place to fuel the move higher. This same scenario looks likely to occur on both the TOTAL and TOTAL2 pairs too.
Stablecoin pairs did start to show some bearish signs with bearish divergence on the RSI and putting in new lower lows on the daily TF and weekly TF with bearish momentum coming in as shown by the engulfing candles and also respecting HTF supply. However, we have continued to the upside with less momentum and approaching key supply zones now. If price manages to push through these then it would be a continuation to the upside for stablecoins and bearish for the rest of the market. Right now its just a case of being patient and watching for signs of bearish structure change on the daily TF as we come into the zones. I think theres a possibility for them to push higher and fake out the highs, creating that capitulation event before reversing and becoming bearish with the market becoming bullish after such an event.
DXY is bullish on the weekly, but remains bearish on the monthly timeframe , coming into HTF supply range on the monthly TF in the premium of the leg. Im expecting the DXY to take out the highs, liquidating the highs, come into that HTF supply and reverse before starting to take out the lows. It looks oversold on the RSI on weekly and monthly and usually results in a reversal at these points. It works inversely to BTC so if the DXY becomes bearish it would be a good sign for the crypto market.
The dynamics are correlating to show short term bearish momentum for a possible long term bullish outlook. The on chain analysis also supports this with supply still getting taken and large volumes on outflow activity occurring. That being said, the economy on a whole look bleak right now, stocks look terrible and BTC has held up pretty well so far in comparison. Talks of one of the biggest recessions is also looming with a macro economic POV that looks pretty trash right now so its all a little uncertain at present, not just for crypto but with the larger economic outlook.
