Macro review – Dollar, the safe haven!

It’s been a few weeks now since the dollar (USD) has regained strength on the market, showing significant weakness among investors who prefer to take refuge in a liquid asset. But what is the impact on the current market?

Warning This article does not constitute investment advice or an invitation to invest. It is for information purposes only. You are solely responsible for your trading and investment decisions.

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What about USD? Time to dig in

The dollar in good shape

A beautiful dollar in great shape, that’s what we have to fear for the rest of our investments, both in the traditional and cryptocurrency markets. So far, what can we say about it?

It’s beautiful, alas! Last week, it broke a major resistance point in its range from the top, and this week confirms it. It had recently attempted a false break from below, which it reintegrated, clearly announcing plans to return to the top of its range. The problem? It broke it. And now it can take off like a rocket.

The next zone to watch? It’s that red zone, the pairing of the end of imbalance and the sellers’ reload zone. In fact, it’s the ideal place to see a reversal in the dollar index. And it’s also, and above all, the ONLY and LAST place. If the dollar crosses it and breaks its last high at almost $115, we’ll be entering an even more aggressive recession than the current one. Investors are becoming increasingly skittish!

The SP500

Conversely, as always, when large portfolios take refuge in the dollar, it’s because other markets are suffering. One of the key economic indicators is the SP500, which groups together the 500 largest US companies.

Does something strike you? That’s to be expected. If not, read on. Inevitably, the dollar’s return to strength has a direct impact on the markets. What should strike you is the SP500’s M-shaped structure. A weekly M is a strong structure, last seen in early 2022, which launched the bear market.

For now, this structure is fully validated! Even so, the meagre hope is that the white trend line drawn has held this week, preceding major support just below it. However, if the USD continues to its red zone, then the SPX should certainly return to its green zone. This would liquidate people on futures and once again instill a certain fear in the minds of less sophisticated investors.

If this hypothesis materializes, the question to be asked will be: opportunity or economic disaster (2008 bis repetita) ? One often goes hand in hand with the other.

Bitcoin

What can we say about the king of cryptocurrencies in this case? Favorable, unfavorable?

At the moment, it’s holding up. No downtrend has begun, as with the SP500. However, a distribution top structure is beginning to form. How is this happening? Quite simply, because it’s forming a shoulder-head-shoulder and could be heading back into oblivion. The uptrend line in white is acting as support for the time being. But for how long?

If this line has the desired effect, we could see a bullish recovery to a very important target of $36,000, warming hearts. However, a return here before the Halving Bitcoin could herald a severe relapse, which we can discuss in another article. However, the dollar’s uptrend being what it is, the legitimate scenario is red. This would allow us to liquidate a lot of people and allow the whales to reload when all the little fish are waiting for $12,000, because in any case, “it’s the end of cryptocurrencies”.

As a reminder Halving in 2024 will halve the rewards for miners. As the production price of the cheapest bitcoin is currently around $11,000, this should rise to around $22,000. Do you really think that with an increase in mining difficulty, the price will actually be below these figures, forcing the bulk of miners to stop mining? Mmmm… let’s think this through.

Conclusion

We’re in the doldrums. The macro-economy is clearly frightening, because it’s hard to see how the central banks are going to be able to control inflation. They’re certainly going to announce that the target is finally 4% instead of 2%. Indeed, returning to 2% seems to herald an economic krach. The current market and, above all, the situation in the United States, which continues to worsen, are evidence of this unprecedented economic downturn.

The real question for us crypto-enthusiasts: Is Bitcoin, the representative of the crypto-asset sector, capable of continuing its lifestyle despite a recession? Would the anti-recession asset be effective? At the same time, assets are arriving in a precise order, the SP500, including all the big market caps (GAFAM and co), then come the US mid-caps and then Bitcoin. Will this cycle be repeated? If so, Bitcoin should go down.

We’ll have the answer once all these events have taken place! In any case, it’s hard to believe that miners won’t continue to heavily drive the market.