The crypto market slumped on Wednesday despite a decent rally from stocks.
So in today’s video, I discuss what could come next for crypto given the state of the DXY, stocks, and Bitcoin.
Updates include the DXY, S&P 500, TOTAL, BTC, and ETH.
US Dollar Index (DXY)
The DXY is still holding below 106.40, which is serving as resistance on a daily closing basis.
A break above that would expose 107.30 and potentially the 108.40 resistance area.
Alternatively, a return to channel support near 105, followed by a close below that would open up the monthly breakout at 103.
This is going to matter for risk assets in August. If stocks and crypto have any hope of continuing this relief rally, the DXY needs to continue to weaken.
S&P 500 (SPX500)
The S&P 500 is trading right at resistance today between 4,140 and 4,200. I continue to think we’ll see a retest of at least 4,200 before more selling pressure emerges.
However, it’s important to understand that the market is technically at or below resistance as of this post.
It’s going to take a daily close above the 4,200 area to flip that region to support and expose 4,300.
Alternatively, the 4,050 area is a must-hold support level for the S&P.
Total Crypto Market Cap (TOTAL)
TOTAL is just barely holding onto the $1.035T support level. The market tried to reclaim $1.05T today but failed in the end.
If $1.035T fails this week and we get a daily close below that, a move toward $985B seems likely, if not a full retracement to $960B.
Alternatively, a rally from $1.035T and a reclaim above $1.05T would be bullish for the crypto market and open the door to $1.15T.
Bitcoin tried to reclaim $23,450 but failed. BTC also closed the day below $23,000, which could be problematic for the relief rally as that level is likely to serve as resistance now.
The next key support for BTC is $22,400, followed by the $21,600 level.
BTC will have to reclaim $23,000 and $23,450 on a daily closing basis to turn constructive again.
ETH is still very sideways and looking relatively weak while below $1,700. That close below the level over the weekend is still serving as a fakeout.
For now, the $1,520 area is likely to serve as critical support for ETH should we see markets pull back this week. A close below that would open up $1,420 again.
Ethereum will have to close a day back above $1,700 to turn constructive again. Until then, the market will remain under pressure.