Crypto Market Update - December 30 2024

Monday Alpha Report
2024 12 30

The Head & Shoulders meme has arrived, with all the major crypto outlets & content creators parading the concept of Bitcoin’s imminent decline to $80,000.

In last week’s reports, I advised a cautious approach and talked about several risk factors appearing in the market. As I expect volatility to pick up this week, it’s essential to be aware of the current downside risk as well as the longer-term upside potential.

While I initially had a more dismissive attitude over the Fed’s hawkishness during our most recent FOMC meeting, as price has continued to be impacted, I doubled down on my analysis. I highlighted how Bitcoin’s significant rallies throughout 2024 were in large part due to a dovish stance from the Fed and clear guidance on current and future rate cuts.

During Powell’s speech two weeks ago, that dovishness evaporated as he pivoted from the assurance of rate cuts to almost the opposite, with the market now pricing in potential RATE HIKES in 2025. This was the catalyst for the current decline in price, bringing Bitcoin back within it’s historical trend of tracking Global Monetary Supply (which has been contracting).

While the majority of the market feels that we are on the brink of an imminent continuation of the Bull Market, as I pointed out not only in last week’s reports but during last week’s live streams, we don’t see the strength we have seen throughout September and November until optimistically end of January, but more realistically end of March or May.

This is because the Fed can’t be seen as so quickly flip-flopping on the issue of inflation, which should not even be their primary concern; unemployment should be, but I digress.

Therefore, my current baseline case is that Bitcoin enters a period of consolidation similar to what we saw from April through October, ranging consolidation making lower lows.

Now, on the topic of alt season, I have yet to reach a conclusive stance on this. As I said in my last report, the market seems committed to the idea of it kicking off Q1 of 2025. Now, even though I believe Bitcoin is unlikely to return to its bullish stride until Q1/Q2 of 2025, there is a historical precedent for altseason popping off without the need for Bitcoin to be rising in price: the 2018 altseason.

At that time, Bitcoin peaked and had already corrected by nearly 30% before alts began to go parabolic. With most alts down significantly, this scenario is unlikely but not impossible. However, at this time, I am not betting heavily on it. Therefore, it is safest for traders to focus on their high-conviction plays and take advantage of the next few months to rebalance their portfolio, set aside fresh capital for investment on further dips, and hold long-term plays.

In the short term, there will be lots of plays for us to anticipate and take advantage of, the primary one right now being AI Agents. I have been doing a deep dive into the ecosystem and market mechanics of the AI Agent sector, spending far too much time on cookie.fun for example, than I would care to admit.

This is the most promising, albeit high-risk, sector to focus on right now for immediate gain and trade opportunities. I recommend adopting a simple trend-following, moving average crossover strategy (30 over 50 EMA) on the 1 to 4-hour timeframe for a simple strategy, as this has backtested to be wildly successful on these assets.

I will post recommendations and trade setups as the New Year progresses.

Market Opportunities:

SPORE - I posted about the Spore opportunity on Thursday. It went up 70% following my post. Has pulled back from 80M MC to 48.5M. Keep your eyes on this one; it might run again, or the party might be over for a while. Momentum is about to fire long on the 4H.

YNE - yesnoerror, sub 30M MC. It’s a ‘DeSci’ AI Agent powered by OpenAI’s o1 model. Its job is to analyze scientific papers for mathematical errors. Followed by most of my smart money accounts on X.

Contract Address: 7D1iYWfhw2cr9yBZBFE6nZaaSUvXHqG5FizFFEZwpump
Chain: Solana
X: x.com/yesnoerror


Macro:

Stablecoin Dominance


So far has been unable to successfully break above 6.00%, however our shorter-term moving averages are creeping up, signifying a potential breakout. While we remain underneath the Daily 200 SMA, this metric is in a bearish trend but it is still showing early warning signs of trend reversal.

Stablecoin + Bitcoin Dominance:


So far, following my original game plan to a T. Dead-cat bounced to re-test the breakdown zone, and is currently trending back down below the 200 SMA. If this trend continues, it will be the strongest evidence of altseason coming as the market predicted.

Altcoin Performance Relative to Bitcoin:


Following the expected bounce from the 200 SMA + Time Transformation Buy Signal, this metric mirrors stablecoin dominance: tight consolidation. So far, this is promising as we have not seen an immediate rejection as altcoins tentatively hold on to their outperformance of Bitcoin in the short term.

Bitcoin

Trends:

5M: Bullish
30M: Bearish
1H: Bearish
4H: Bearish
D: Bullish

Key Levels:
POC: $95,347
VWAP: $93,035
Value Area High: $94,700 - $95,171
Value Area Low: $90,899 - $91,946
Resistance: POC
Support: $92,000

Strategy:

Bitcoin is putting in a nice reaction following its brief dip below $92,000 - however, we’re far from out of the woods. 30M is coming up upon resistance, and price has been faked out several times. Price above $95,000 starts to get a bit more hopeful; however, I see a position here. Unless the last four hours of gains are completely given back, this is a promising Daily Doji candle at support, which has lead bounces on the three previous situations in which it occurred.

I can’t underscore enough, however, that Bitcoin is on the cusp of losing its bullish daily trend and is bearish on all other time frames less the 5 minute. The only other chance would be a bounce off the 10 Weekly EMA, which we just experienced on today’s dip.

Regardless, Bitcoin either takes advantage of this short-term momentum and makes a test of $96,000 - or we give back our gains quickly and break support, opening up the $80-$85,000 territory for us. The former is more likely.