The in-line CPI numbers have rekindled optimism in the market. Also, Trump's impending inauguration has re-galvanized hopes for a better regulatory environment.
Let's start with some macro indicators because they suggest that things really are pretty good.
First up is one of my favorites, the VIX Term structure.
We want to see a smooth path of dots going up and to the right -- like a nice parabola.
Next, we want to see the contango ratio above 3%. In fact, we have that for the most immediate term (ending on the 21st) and the next month too.
This one looks nice.
Next, the CME Fed Watch tool suggests that traders have reconsidered their bets. The consensus now believes that the FED will make its first cut in H1 of 2025.
For alt-coins, this suggests, at least indirectly, that the end of QT is likely to come in the first half of the year also.
Third, alternative (dot) me has a fear and greed index focused just on $BTC.
You can see that it dropped into the yellow "neutral" range for a day and is back in the "greed" area.
Most of a bull run happens in the Greed or Extreme Greed range, so this is a healthy development.
The CMC Fear and Greed index is similar. It follows most large coins and not only $BTC.
Recently it ranked well into the neutral range, almost into the Fear range, but has returned (by one point!) into the Greed range.
Remember, most gains happen in the Greed range for this index. It's more of a trend follower than a contrarian signal.
Concluding Thoughts
It looks as though we're exiting the crypto dip. That doesn't mean you can buy just anything.
$BTC is still relatively expensive. It stands some 25% above its SMA 200, though it did recently put in a double-bottom near $92k. The net result is, likely, a bit more sideways action.
Other coins, such as $NEAR, are likely cheaper on a relative basis. AI Agents, by contrast, are still astronomically hot.
As always, Do Your Own Research. This is not Financial Advice. The market is up, but you need to be selective.
Happy Trading!
-Sebastian Purcell, PhD
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