Is the bear market halfway through?

Bitcoin Analysis

Bitcoin had a fairly weak week. On the 12H chart, it closed multiple times below the bear flag, confirming a breakdown of that structure. From a macro perspective, the main catalyst was the renewed escalation in the Iran war. A ceasefire that many had been hoping for was rejected by Iran, while U.S. demands were extended into April, sending oil above $100 and putting additional pressure on risk assets.

From a technical standpoint, Bitcoin rejected at the range highs of the bear flag 2 weeks ago, exactly where I called for profit taking and started considering shorts. From there, price moved down toward the range lows, attempted to reclaim the $72,000 area, failed, and ultimately broke below the bear flag. Even without the geopolitical backdrop, this structure already looked vulnerable. My base case remains that Bitcoin will now retest the broken bear flag from below and then continue lower within the broader stage 4 range, with sub $60,000 levels increasingly likely.

On the macro level, Bitcoin still looks very weak. In my view, the bear market is only about halfway through. There is still a long way to go, and it is important to remember that crashes tend to be violent, fast, and psychologically overwhelming. When the next major leg lower begins, it can unfold within just a few days and catch most investors off guard. I continue to believe that it is only a matter of time before Bitcoin reaches $45,000 and below.

In the very short term, I remain somewhat constructive for the next few weeks, mainly because Michael Saylor is still likely to continue buying Bitcoin with billions of dollars. That said, any rally from here should be treated with caution. A bounce is not guaranteed, and even if it happens, I do not expect it to be sustained within the broader bear market structure.

S&P 500 Analysis

The S&P 500 had another weak week, marking its 5th consecutive negative weekly close. Back in January I warned that traditional markets, and specifically the S&P 500, could decline by 10% to 15%, and we are now already down 8.88%. The broader correction is clearly unfolding and the weakness is in line with the macro and technical risks I have been outlining for months.

As mentioned before, the S&P 500 has now entered our first downside zone around $6,500. The next key zone remains $6,200. If I begin to see signs that the Iran war is cooling down or that peak fear has been reached, I am prepared to reenter the market. After selling most tech exposure and all crypto in August and September, the focus now remains on patience, capital preservation, and waiting for the right conditions to step back in.

Economic Data, Rates & the Fed

Last week’s economic data came in relatively weak overall, reflecting growing softness in the economy amid elevated geopolitical uncertainty. Services activity slowed notably, with the S&P Services PMI dropping to an 11 month low, while construction spending declined and consumer sentiment fell to a 4 month low. Productivity also weakened and unit labor costs increased, adding pressure on the inflation side. The Atlanta Fed lowered its Q1 GDP estimate to 2.0%, pointing to slowing growth momentum. On the more positive side, manufacturing activity improved, driven by stronger new orders, and the labor market remained relatively stable with jobless claims only slightly higher.

Last week Treasury yields moved higher again, with short and long term rates approaching key resistance levels before pulling back slightly, reflecting ongoing inflation concerns and uncertainty. The yield curve continued to flatten, signaling a cautious macro outlook. Market expectations for Federal Reserve policy remained tilted toward a restrictive stance, though expectations for rate hikes eased somewhat. Probabilities for hikes later this year declined across the board, suggesting that while markets still see upside risks to rates, conviction around further tightening is weakening as growth data softens.

Economic: Construction Spending
Earnings: Abivax SA (ABVX), Agi Inc. (AGBK), AITI Global Inc. (ALTI), Caledonia Mining Corp. (CMCL), DBV Technologies SA (DBVT), Lithium Argentina AG (LAR), WeRide Inc. (WRD)

Economic: New Home Sales
Earnings: AAR Corp. (AIR), Centessa Pharmaceuticals (CNTA), Concentrix Corp. (CNXC), Core and Main Inc. (CNM), GameStop Corp. (GME), Hesai Group (HSAI), KB Home (KBH), New Gold Inc. (NGD), Smithfield Foods Inc. (SFD), T1 Energy Inc. (TE), Worthington Enterprises Inc. (WOR)

Economic: Current Account Balance, Durable Orders, EIA Crude Oil Inventories, Export Prices, Import Prices, Mortgage Applications Index
Earnings: Alumis Inc. (ALMS), Celcuity Inc. (CELC), Chewy Inc. (CHWY), Cintas Corp. (CTAS), H.B. Fuller Company (FUL), Jefferies Financial Group Inc. (JEF), JinkoSolar Holding Co. (JKS), Karman Holdings Inc. (KRMN), Ondas Inc. (ONDS), Paychex Inc. (PAYX), PDD Holdings Inc. (PDD), Winnebago Industries Inc. (WGO)

Economic: Continuing Claims, EIA Natural Gas Inventories, Initial Claims
Earnings: Argan Inc. (AGX), Bicara Therapeutics Inc. (BCAX), Commercial Metals Co. (CMC), Kodiak Sciences Inc. (KOD), Lumexa Imaging Holdings Inc. (LMRI), Pony AI (PONY), Seabridge Gold Inc. (SA), TMC the metals company Inc. (TMC)

Economic: Advanced International Trade in Goods, Advanced Retail Inventories, Advanced Wholesale Inventories, GDP Third Estimate, PCE Prices, Personal Income, Personal Spending, University of Michigan Consumer Sentiment Final
Earnings: Autolus Therapeutics PLC (AUTL), Carnival Corp. (CCL), Humacyte Inc. (HUMA), Legence Corp. (LGN), SBC Metals Group Holdings (SBC)

If you manage a 6- to 7-figures or more portfolio, missed the top and want clarity with a structured timing system, make sure to watch my free training: https://sonderbergresearch.com/video

Kind regards,
Diego Sonderberg

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