Market Briefing 12: Crypto at the Bottom of Its Range as the Bond Market Tightens

Market Review on Bitcoin

Back to the bottom of the range

There was a fair amount of movement on Bitcoin over the last seven days, though with some perspective the structure hasn't really changed. Last Wednesday, BTC had come back around $82,800 and closed near $83,500, landing almost perfectly on the bottom of the new range we've been tracking since September 21. From there, it had managed to bounce.

Then last Friday, it went back to look for the top of the range with a high around $87,300. Same thing on Monday, with another test of the $87,000 zone. But that resistance held once again and, overnight from Tuesday to Wednesday, Bitcoin finally took a sharp correction, about -2.7% on the day as we write, back down around $82,600.

So here we are, right on the bottom of the range Bitcoin has been moving in since September 21, now pretty clearly defined: a floor around $82,600 - 82,700, and a ceiling around $87,000 - 87,300. BTC has therefore run through almost the entire range to the downside after failing once more under its resistance.

The different scenarios

• First scenario: $82,600 holds

The first scenario, the most favorable in the short term, is that we bounce once again off $82,600. This is the zone that had already served as support last week, and that we're working again now. If we manage to bounce off it, then we're back in a classic range and we can aim for the ceiling around $87,000 - 87,300. It would also be the best case for altcoins, which are suffering more than Bitcoin right now.

A variant leads to the same result: a wick below $82,600 to scare the longs and grab some liquidity, before quickly reclaiming the range. As long as the structure isn't clearly invalidated, there's no need to over-read a wick below the support.

• Second scenario: $82,600 lost and a move back toward $79,000

The second scenario, which we were already mentioning in previous editions, is that Bitcoin really loses $82,600. We'd then be looking at a move back toward $79,000 - 79,200. Nothing alarming for the underlying trend, but we'd want to see BTC consolidate on those prices before heading back up.

The sequence would therefore be: $82,600 lost, move back toward $79,000 - 79,200, consolidation and bounce, then $82,600 reworked as resistance before an attempt to reclaim the range. As long as the structural levels of the new uptrend aren't invalidated, this move stays a simple consolidation.

Despite today's drop, no reason to panic on Bitcoin: it's coming back to a support we'd already flagged and the structure stays clean. The major short-term resistance is on $87,200, the immediate floor on $82,600. It's the market's reaction on that zone that will set the tone for what's next.

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A Look at the Altcoins

Bitcoin's structure stays clean, but it's less comfortable on the altcoin side. First signal, Bitcoin dominance has climbed back toward 59.7%, its level from September 21: BTC is therefore recapturing a bigger share of the market, at the altcoins' expense. TOTAL3 has corrected harder than BTC and, even though it hasn't yet lost its key levels, its behavior is a notch below.

Ethereum loses $2,630

Ethereum (ETH) is the symbol of this lack of strength, after holding up pretty well since July. We'd been tracking the $2,630 zone for a while, which had served as support several times. ETH just went clean through it, down about -5% on the day, and is now heading toward $2,530, the next big zone we're watching.

That's where we want to see a reaction: ideally, $2,530 holds as support and ETH bounces. If it gives way too, Ethereum risks dropping back into its old $2,360 - 2,530 range, which would be a bit more of a problem in the short term.

That said, keep some perspective. For the record, ETH flipped back into an uptrend in August after reclaiming $2,460. In other words, it keeps some margin before the underlying structure is really called into question, but the reaction on $2,530 will matter for what follows. To sum up: $2,630 is the support that just broke, $2,530 the next big zone to defend, $2,360 - 2,530 the old range ETH could fall back into on further weakness, and $2,460 the structural level that validated the trend reversal.

HYPE stays technically very clean

On the HYPE side, it's much more reassuring. Within its uptrend, the token had built a low around $75 in mid-September, before accelerating hard to a new all-time high around $97. Last Wednesday, during the previous correction, it formed a new low around $84, then bounced, before correcting again today with the rest of the market. It's now around $88.

Nothing worrying at this stage. Unlike other altcoins, HYPE hasn't broken any important level: it's holding above its last low at $84 and keeps a very clean trend. It keeps showing solid relative strength despite the general correction.

A technical note on Derive (DRV)

We're watching Derive closely, since we recently opened a position on DRV in our portfolio, built in several steps. We'd come back to add when the token bounced last Tuesday around $0.368. That zone interested us for two reasons: an important technical support, and above all the 0.382 Fibonacci. Except DRV just lost it and is now trading below, which forces us to look lower.

First zone, $0.326, the 0.5 Fibonacci, with a bonus confluence since it also roughly lines up with the 200-period moving average (MA200). That's the first zone where we'll watch DRV's reaction. If that doesn't hold, the next zone is around $0.28: both the old major resistance broken during the last up-move and the 0.618 Fibonacci. A move back down there would be a much sharper correction, but still healthy within the overall structure. If DRV drops there, we'll likely add to our position, provided the technical reaction matches our scenario and our underlying thesis hasn't changed.

The levels to keep on DRV: $0.368 the old support (0.382) now lost, $0.326 the first big zone (0.5 + MA200), and $0.28 the second (old major resistance + 0.618).

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An Important Macro Note

A word, finally, on the macro backdrop, because it explains a good part of the pressure on the market. The US 10-year yield has pushed back above 5.35%, a first in 24 years, and the 30-year hit 5.72%. It's the direct continuation of the theme we've been following since the summer: the end of cheap money.

As long as long-term rates climb, "duration" assets (tech, growth stocks, and by extension crypto) foot the bill. At 5.35%, bonds become a credible alternative to equities, and that's capital that doesn't flow toward risk.

Two things keep this pressure on. Oil first: still no negotiation between the US and Iran, an Iranian official ruling out any renouncement of uranium enrichment, and a Brent holding above $102. Our barometer stays tilted upward, and every refusal to talk reinjects an inflation premium into the barrel, and therefore into rates.

Credit next, a more discreet but telling signal: stress on leveraged credit is back to its March 2020 levels. Loans trading below 60 cents reach $65 billion, a five-year high, with tech on the front line. The rising cost of debt is starting to hurt, right as a big wall of refinancing is coming.

Last point to grasp the mood: AI is increasingly financing itself with debt. SpaceX, for example, is in talks to raise $40 billion to buy Nvidia chips, while the ten biggest S&P 500 names now make up 41% of the index. AI capex is exploding, but the job market is deteriorating sharply (-12% on the information sector since 2022).

Bottom line, the equity market may have printed a new record, but several analysts are a lot less upbeat about it, and BTC took the hit today, with a wick of nearly $2,000 in twenty minutes and some $400 million of leveraged longs liquidated.