Yields Falling, Bitcoin Stalling

KEY TAKEAWAYS

Macro mixed; bonds bid. Jobs strong, CPI soft, yields falling despite low cut odds.
Risk-off rotation. Defensives leading; sentiment gauges weigh on BTC.
BTC still weak. Bearish trend; possible exhaustion near $58K.

DIGITAL ASSET COMMENTARY

Last week provided ammunition for both hawks and doves. Jobs data came in stronger than expected, while CPI was softer than forecast. Real-time inflation measures, including Truflation, continue to show a sharp decline in inflation since mid-December. Despite this, rate expectations have barely shifted, with markets still pricing roughly a 90% probability of no cut at the March meeting.

The bond market, however, appears to be responding. Both 2-year and 10-year Treasury yields moved lower, and long-duration ETFs such as TLT are showing attractive breakout setups for the first time since 2020. It remains unclear whether this move signals more rate cuts ahead than currently priced in, or simply reflects rising growth concerns and defensive positioning.

Equities are beginning to show signs of strain. SPY is treading water, QQQ is rolling over, and traditional risk-off sectors are outperforming. Utilities, materials, energy, industrials, and consumer defensive names have led over the past month. The XLY/XLP ratio, a classic risk appetite gauge, continues to favor defensive positioning. More concerning is its correlation with BTC, which suggests ongoing downside pressure for crypto. Bitcoin has already posted its worst single day of the year since 2022 and is on pace for its weakest Q1 since 2018. While forward returns following sharp down days are positive on average, there is currently little technical evidence supporting an imminent bullish reversal.

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Technical analysis on BTC remains bearish. Both the daily and weekly 10/50 moving average (MA) crosses are bearish, and price remains below the 200-day MA. Constructive long setups would likely require a marginal lower low below $58K on declining momentum, signaling bearish exhaustion and potential bullish divergence in volume or oscillators. That level also aligns with the 200-week MA, which has historically marked cycle bottoms in prior bear markets. Until BTC stabilizes, the broader altcoin complex is likely to remain under pressure.

For educational purposes only. Past performance is not indicative of future results. Investments may be speculative, illiquid and there is a total risk of loss of principal. There is no guarantee that any specific outcome will be achieved.

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