After three weeks of heavy downside, Bitcoin is consolidating, and the only question that matters now is whether this is a true bottom or just a pause before the next bear market leg.

Bitcoin

After 3 weeks of sustained downside, the crypto market finally saw a week of consolidation. Bitcoin traded in a range between ~65’000 and ~71’000 and is on track to close the week in green. The key question right now is whether the bottom is in. In the mastermind and mentorship we mapped out a structured plan for both potential long and short setups rather than reacting emotionally to short term price swings.

My base case remains that Bitcoin will consolidate for a longer period between the high 50’000s and the yearly open at 87’500. If price is allowed to revisit the yearly open, that would offer a strong area to add to short exposure in line with the broader bear market thesis. Later this year I still expect another 30% to 50% decline that pushes price below the 200 SMA, consistent with previous cycle behavior. While many professional groups continue to call for 140’000 or even 180’000, I publicly called the top and shorted with conviction when the 3D and monthly divergences were present. It is critical to understand who bases decisions on structured macro analysis and who follows narratives. Interestingly, more market commentators are now discussing a September or October bottom scenario that I have outlined since September 2025. When a narrative becomes crowded, there is a risk that smart money front runs it. For that reason we will rely on real time bottom indicators rather than being anchored to a specific calendar date.

S&P 500

The S&P 500 closed the week lower at 6836 and the weekly bearish divergence remains intact. Technology stocks continue to struggle and most have not made new highs since October. This reflects a broader regime shift. Changes in monetary policy from Japan and other central banks have signaled that global liquidity conditions are evolving. Smart money began reducing risk exposure in August and September, while retail participation accelerated into the highs. Now the realization of this regime shift is spreading, but after significant damage has already occurred.

From a macro and technical perspective, the risk of a larger correction in the coming weeks and months remains elevated. The divergence structure has not been invalidated and until clear bottom signals appear, capital preservation remains the priority.

Economic Data, Rates & the Fed

This week’s economic data delivered a mixed but overall resilient picture of the U.S. economy. Nonfarm Payrolls rose by 130’000 versus 65’000 expected and the unemployment rate ticked down to 4.3%, reinforcing the view that the labor market remains stable (side note: I am a bit skeptical with the job numbers at the moment, they may be revised again). Wage growth came in slightly stronger at 0.4% month over month. In contrast, retail sales were flat in December and the control group declined 0.1%, signaling some moderation in consumer momentum. Inflation data was relatively benign, with headline CPI rising 0.2% month over month and 2.4% year over year, both below expectations, while core CPI held at 2.5% year over year, the lowest level since April 2021. GDP expectations were revised lower, with the Atlanta Fed nowcasting Q4 growth at 3.7% versus 4.2% previously, and Treasury yields declined sharply across the curve, with the 10 year falling to 4.06%.

Despite cooler inflation and falling yields, market expectations for rate cuts moved lower following the strong jobs report. The probability of a 25 basis point cut in March dropped to 10% from 20%, April fell to 30% from 38%, and June eased to 85% from 97%. The overall message from markets is that while inflation is moderating, the economy remains firm enough to reduce the urgency for aggressive easing. Investors now expect the Federal Reserve to remain patient, keeping policy restrictive for longer unless labor or inflation data deteriorates more decisively.

Economic: no reports
Earnings: Omnicom Group Inc. (OMC), Otter Tail Corp. (OTTR), Renew Energy Global PLC (RNW), Sonoco Products Co. (SON)

Economic: Empire State Manufacturing
Earnings: Amrize AG (AMRZ), Cadence Design Systems Inc. (CDNS), Constellation Energy Corp. (CEG), Energy Transfer LP (ET), EQT Corp. (EQT), FirstEnergy Corp. (FE), Medtronic PLC (MDT), Palo Alto Networks Inc. (PANW), Vulcan Materials Co. (VMC)

Economic: Building Permits, Capacity Utilization, Export Prices ex-ag, Housing Starts, Import Prices, Industrial Production, MBA Mortgage Applications Index, Net Long-Term TIC Flow
Earnings: Analog Devices Inc. (ADI), Booking Holdings Inc. (BKNG), Carvana Co. (CVNA), Clean Harbors (CLH), CRH PLC (CRH), DoorDash Inc. (DASH), eBay Inc. (EBAY), Garmin Ltd. (GRMN), Global Payments Inc. (GPN), Insulet Corp. (PODD), Moody's Corp. (MCO), Occidental Petroleum (OXY), Verisk Analytics Inc. (VRSK)

Economic: Continuing Claims, EIA Crude Oil Inventories, EIA Natural Gas Inventories, Initial Claims, Pending Home Sales, Philadelphia Fed Index
Earnings: Alliant Energy Corp. (LNT), Cenovus Energy Inc. (CVE), CenterPoint Energy Inc. (CNP), Comfort Systems Inc. (FIX), Copart Inc. (CPRT), Deere and Co. (DE), Extra Space Storage Inc. (EXR), Gold Fields Ltd. (GFI), Live Nation Entertainment Inc. (LYV), Newmont Corporation (NEM), Quanta Services Inc. (PWR), Southern Co. (SO), Targa Resources Corp. (TRGP), Walmart Inc. (WMT)

Economic: Chain Deflator, Q4 GDP Advanced, PCE Prices, Personal Income, Personal Spending, University of Michigan Consumer Sentiment Final
Earnings: AngloGold Ashanti PLC (AU), Balchem Corp. (BCPC), Hudbay Minerals Inc. (HBM), Lamar Advertising Co. (LAMR), PPL Corp. (PPL), Sibanye Stillwater Ltd. (SBSW), Vipshop Holdings Ltd. (VIPS)

If you manage a 6-figures or more portfolio, missed the top and want clarity with a structured timing system, make sure to get my free training: https://sonderbergresearch.com/video

Kind regards,
Diego Sonderberg

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