Bitcoin has spent two months going nowhere on the surface, but beneath the range the market is quietly positioning for a move that will decide the next major leg of this cycle.

Bitcoin

Bitcoin has been ranging for almost 2 months now, something I already anticipated back in November. This extended consolidation has allowed the market to cool down and reset sentiment after the sharp decline. During this period I selectively took a few trades, one of them being the long around 85K, which played out successfully. Aside from that, nothing structurally meaningful has changed.

Bitcoin continues to hold a 3D bullish divergence, which supports the case for a move higher over the coming weeks. This move would most likely result in a bearish retest of the 50 week moving average, marked by the yellow line, in the 102K to 107K region. A retest of this zone is not guaranteed, but it remains likely. In previous cycles, Bitcoin has always revisited former structural support after losing it, and assets generally seek to retest prior strongholds.

If we do see a move up to the 50 week moving average or into the 102K to 107K zone, I will continue taking profits on my swing long positions and begin opening short exposure again. As stated repeatedly, I believe the cycle top is already in and that we are operating within a broader bear market structure. For those who did not take profits near the top and missed the exit, a bearish retest provides an important opportunity to reduce exposure.

Many of my clients who joined after the October top are now following structured exit plans designed to preserve capital and position them optimally for the next cycle bottom. Several of them are on track to move from six figure portfolios into the 2 to 3 million range over the next 1.5 to 2 years. Watching that progression unfold is one of the most rewarding aspects of this work.

Taking profits in the retest zone is critical, as I expect Bitcoin to move toward the 70K area next and later into the 60K region. Market participants should be mentally prepared for further downside. Altcoins, in particular, could still lose another 80% from current levels.

S&P 500

The S&P 500 is also beginning to show signs of fatigue. We have discussed this in greater depth inside the mastermind. The index has formed and extended a 5D bearish divergence, which does not imply an immediate correction but does suggest cooling momentum and elevated downside risk over the coming weeks.

Divergences carry less weight in traditional markets compared to crypto, but they remain valuable when viewed in context. Given the current setup, I have no interest in initiating new equity positions at these levels. A correction accompanied by clear bottom signals and a defined demand zone would be required for me to become a buyer again.

We also analyzed Bollinger Bands in detail. The S&P 500 is currently trading near the upper band. This alone is not a top signal, as markets can remain extended for long periods. Bollinger Bands are most effective when used in combination with other indicators. If a correction pushes price toward the lower band and aligns with clear bottom signals, that would present a high probability buying opportunity similar to the one in April.

DXY

The US Dollar Index rejected once again at the 100 level in November and declined throughout December. It found support around the 97.7 area, precisely where the blue parallel channel that has been respected since 2008 to 2010 resides. This channel is structurally important.

A confirmed breakdown below this channel would signal a meaningful shift in the macro Dollar structure and would likely be supportive for risk assets such as crypto. On the other hand, a breakout above 100 toward 105 and potentially 115 or higher would be strongly bearish for risk assets.

At this stage, the latter scenario remains more likely and aligns with my bearish outlook on crypto over the coming months.

Economic Data, Rates and the Fed

This week brought a lot of economic data, mainly on the US labor market. The picture remains a low hire, low fire environment. Job openings fell to the lowest level since September 2024 at 7.14 million, below expectations. Jobless claims stayed low and payroll growth continues to slow. So far, 2025 is shaping up as the weakest year for job growth since the pandemic.

Unemployment fell to 4.4%, below expectations, while Nonfarm Payrolls rose only 50,000 and missed forecasts. The signals are mixed. Lower unemployment suggests strength, while weak payroll growth points to cooling. The Fed focuses more on the unemployment rate and was already hawkish at the last meeting. The drop in unemployment supports that stance, reduces the chance of a rate cut this month, and keeps inflation in focus. CPI and PCE data will be key ahead of the next FOMC. If inflation does not ease, policy is likely to stay unchanged.

The Atlanta Fed GDPNow estimate for Q4 jumped sharply, driven mainly by a strong revision in net exports. It was later trimmed slightly but still points to strong growth around 5%.

The US yield curve flattened slightly over the week. Two year yields moved higher, while ten and thirty year yields edged lower.

Market expectations for Fed rate cuts continued to fall. After the drop in the unemployment rate, the implied odds of a cut in January, March, and April all declined. Historically, the Fed tends to act when markets price a probability of around 65% or more. Based on current pricing, markets now expect the next rate cut to come at the June FOMC meeting.

Economic: no reports
Earnings: Sify Technologies Ltd. (SIFY), Sono-Tek Corp. (SOTK), Wealthfront Corp. (WLTH)

Economic: CPI, New Home Sales, Treasury Budget
Earnings: Bank of New York Mellon Corp. (BK), Concentrix Corp. (CNXC), Delta Airlines Inc. (DAL), JPMorgan Chase and Co. (JPM), Phoenix Education Partners Inc. (PXED)

Economic: PPI, Current Account Balance, EIA Crude Oil, Existing Home Sales, MBA Mortgage Applications Index, New Home Sales, Retail Sales
Earnings: Bank of America Corp. (BAC), Bitmine Immersion Technologies Inc. (BMNR), Citigroup Inc. (C), H. B. Fuller Company (FUL), Home BancShares Inc. (HOMB), Infosys Ltd. (INFY), Wells Fargo and Co. (WFC)

Economic: Continuing Claims, EIA Natural Gas Inventories, Empire State Manufacturing, Export Price, Import Prices, Initial Claims, Net Long-Term TIC Flows, Philadelphia Fed Index
Earnings: BlackRock Inc. (BLK), First Horizon Corp. (FHN), Goldman Sachs Group Inc. (GS), J.G. Hunt Transport Services Inc. (JBHT), Morgan Stanley (MS)

Economic: Capacity Utilization, Industrial Production, NAHB Housing Market Index
Earnings: M and T Bank Corp. (MTB), PNC Financial Services Group Inc. (PNC), State Street Corp. (STT), Regions Financial Corp. (RF), Wipro Ltd. (WIT)

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

Kind regards,
Diego Sonderberg

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