Bitcoin delivered textbook bear-market volatility, and the next decisive move will be driven by whether this rebound is only a pause before the true cycle low.

Bitcoin

Bitcoin had an extremely volatile week. It dropped more than 10K in a single day and then rebounded roughly 10K the next, recovering most of the move within 24 hours. This type of volatility is normal in a bear market, especially as price moves lower and liquidity thins. In these environments it is easy to lose emotional control and start making reactive decisions. The best approach is to stay disciplined and avoid the noise on Crypto Twitter and other clickbait sources that profit from trading volume and engagement rather than being right.

My call to buy below 60K was executed perfectly and marked the exact local bottom, at least in the short term. As you know, I sold my crypto holdings in October and built short exposure with an average entry around 120K, which means I am positioned to buy again when the cycle bottom forms. That said, I do not believe the cycle bottom is in yet, and 60K was not the final bottom. My base case is that Bitcoin will form a local bottom in the coming weeks, followed by another leg lower into the true cycle low where I will begin accumulating more aggressively. Weekly RSI has reached oversold territory, but this alone is not a bottom signal. In bear markets RSI can remain oversold for extended periods and continue pushing lower. Given the speed of this correction, it is possible the ultimate bottom prints earlier than expected, but until we see proper bottom signals and structural confirmation, patience remains the highest edge.

S&P 500

The S&P 500 had a relatively constructive week closing in green. The weekly bearish divergence remains. My broader view remains unchanged. I still expect a larger correction ahead, likely exceeding 10%. If that unfolds, it would add further downside pressure to crypto and reinforce the risk off regime that markets have been transitioning into.

US Dollar Index

The US Dollar Index recovered from its lows following last week’s crypto and silver liquidation event. Over the coming months I expect the DXY to finally break above the 100 level. This has been a multi year battle, but the regime is shifting toward risk off conditions, which typically supports Dollar strength. In that environment holding high beta risk assets like crypto is structurally disadvantaged, and capital preservation becomes more important than forcing upside exposure.

Economic Data, Rates & the Fed

Economic data was limited this week due to the government shutdown, but what we did get leaned clearly toward a cooling labor market. ADP payrolls were weak at 22K versus 45K expected and December was revised lower. Job openings fell to 6.542M, the lowest level since late 2020, Challenger layoffs jumped to 103,435 which is the highest since 2009, and even jobless claims moved higher with initial claims rising to 231K, a 2 month high, while continuing claims increased to 1.844M. At the same time, parts of the real economy are still holding up. Manufacturing output improved with S&P Global Manufacturing PMI rising to 52.4, the strongest production growth since May 2022, services remained expansionary with ISM non manufacturing holding at 53.8, and S&P Global Services PMI ticking up to 52.7. Consumer sentiment improved modestly, with 1 year inflation expectations falling to 3.5 while longer term expectations edged up to 3.4. The Atlanta Fed GDPNow estimate for Q4 remained unchanged at 4.2.

Rates markets were mostly stable on the week, although yields were volatile inside the week. The 10 year yield moved up to 4.30 midweek before falling back to around 4.21, while the 2 year, 10 year, and 30 year yields ended slightly lower versus last Friday. Markets are watching next week closely because delayed releases will hit at once. The Nonfarm Payrolls report is now scheduled for next Wednesday and the CPI report is scheduled for next Friday the 13th rather than the 11th. Rate cut expectations for 2026 were little changed overall. Probabilities imply little urgency for near term easing, with March roughly unchanged around 16, April slightly lower in the low 30s, and June still carrying the highest likelihood in the high 80s to low 90s. In short, the market is waiting for the delayed labor and inflation prints to confirm whether weakness is accelerating or whether growth remains resilient enough to keep the Fed on hold longer.

Economic: no reports
Earnings: Apollo Global Management Inc. (APO), Arch Capital Group Ltd. (ACGL), Becton Dickinson and Co. (BDX), Cincinnati Financial Corp. (CINF), Cleveland-Cliffs Inc. (CLF), CNA Financial Corp. (CNA), Dynatrace Inc. (DT), Monday.com Ltd. (MNDY), ON Semiconductor Corp. (ON), Principal Financial Group (PFG), Waters Corp. (WAT)

Economic: Business Inventories, Employment Cost Index, Export Prices ex-ag, Factory Orders, Import Prices, Retail Sales
Earnings: America Movil SAB de CV (AMX), Barclays PLC (BCS), BP PLC (BP), Cloudflare Inc. (NET), Coca-Cola Co. (KO), CVS Health Corp. (CVS), Duke Energy Corp. (DUK), Gilead Sciences Inc. (GILD), Marriott International Inc. (MAR), Robinhood Markets Inc. (HOOD), S and P Global Inc. (SPGI), Spotify Technologies SA (SPOT)

Economic: Nonfarm Payrolls, Average Hourly Earnings, Average Workweek, Unemployment Rate, EIA Crude Oil Inventories, MBA Mortgage Applications Index, Treasury Budget
Earnings: Applovin Corp. (APP), Cisco Systems Inc. (CSCO), Equinix Inc. (EQIX), Hilton Worldwide Holdings Inc. (HLT), Martin Marietta Materials Inc. (MLM), McDonalds Corp. (MCD), Motorola Solutions Inc. (MSI), NetEase Inc. (NTES), Shopify Inc. (SHOP), T Mobile US Inc. (TMUS), Vertiv Holdings Co. (VRT)

Economic: Producer Price Index PPI, Continuing Claims, EIA Natural Gas Inventories, Existing Home Sales, Initial Claims
Earnings: Agnico Eagle Mines Ltd. (AEM), Airbnb Inc. (ABNB), American Electric Power Company Inc. (AEP), Anheuser Busch Inbev SA (BUD), Applied Materials Inc. (AMAT), Arista Networks Inc. (ANET), Brookfield Corp. (BN), Howmet Aerospace Inc. (HWM), Vertex Pharmaceuticals Inc. (VRTX), Zoetis Inc. (ZTS)

Economic: Consumer Price Index CPI
Earnings: Cameco Corp. (CCJ), Enbridge Inc. (ENB), Magna International Inc. (MGA), Moderna Inc. (MRNA), NatWest Group PLC (NWG), TC Energy Corp. (TRP)

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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