This week brought significant movements across crypto and traditional markets, driven by tariffs, macroeconomic shifts and critical technical signals. Here’s a breakdown of the current landscape and key factors to watch going forward.

Here’s what we’ll cover today:

Let’s dive in!

Global markets are sending mixed signals as the S&P 500 approaches overbought territory with an RSI just shy of the critical 70 threshold that typically precedes corrections.

This technical warning comes amid broader concerns about US fiscal stability, with markets reacting to the US-China trade truce not with optimism but with growing anxiety over America's fiscal trajectory.

The clearest manifestation of this concern is in fixed income markets, where US debt investments are significantly underperforming their global counterparts. The Bloomberg US Aggregate Index has delivered roughly half the returns of the Bloomberg Global Aggregate Index year-to-date, with US Treasuries now yielding more than certain European sovereign debt previously considered riskier.

This unusual inversion suggests a fundamental reassessment of US creditworthiness, with investors demanding increased risk premiums as national debt approaches $36 trillion and new fiscal proposals threaten to expand deficits further.

Despite recent moderation in inflation, market expectations for Federal Reserve rate cuts have diminished considerably since mid-April. The 10-year Treasury yield has pushed above 4.5% as investors reassess the likelihood of monetary easing. Most significantly, despite rising US yields, which would typically strengthen a currency, the dollar has failed to rally, indicating yields are increasing not due to robust growth prospects but because of debt sustainability and inflation concerns.

This dollar weakness represents a crucial shift in market dynamics that typically enhances global liquidity and favors risk assets. A declining dollar reduces funding stress in global markets, particularly for dollar-denominated debt, and encourages capital rotation into higher-yielding or alternative investments.

Bitcoin appears well-positioned in this environment. A weakening dollar enhances its appeal as an alternative store of value, while looser monetary conditions tend to boost demand for higher-beta assets. Unlike gold, Bitcoin has shown resilience against rising real yields, potentially reflecting its dual characteristics as both a perceived inflation hedge and a technology-driven growth asset.

As central banks navigate this complex landscape characterized by fiscal uncertainty and evolving monetary policy expectations, investors should remain vigilant for signs of regime change across asset classes.

The combination of elevated equity valuations, rising bond yields, and dollar weakness suggests markets may be approaching an inflection point, with continued dollar weakness likely reinforcing current trends in global asset allocation, potentially favoring non-US assets and alternative stores of value in the months ahead.

Now let’s dive into the part you’re really here for: the charts, key levels, trade scenarios and what’s next for crypto. 🔥 

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