Note: this will have a lot of US-centric data. It's not because I think the US is the center of the world, but the crypto market has reacted more heavily on US data.

Why do outside markets matter for crypto?

While it's true that lately correlation between crypto and traditional markets hasn't been as consistent as it was earlier this year, the macro picture could still affect the crypto market.

While crypto has a lot of its internal forces (like the halvings) which long term outweighs outside influence, short term the outside influence could have a bigger impact.

Good News:

-US GDP is back up.

It's currently up by more than 4%. Inflation adjusted, the real GDP is up 2.9%.

This one has many people in disbelief, as we are supposed to be in recession, and officially were since we had two consecutive negative GDP quarters earlier this year.

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Quarterly real US GDP (inflation adjusted)

-CPI is cooling off.

It has cooled off from 9.1% at its peak this year, down to now 7.7%.

But that still means inflation is going up, so why is it good news? It means inflation is cooling back, and showing that whatever was fueling it, is beginning to reverse.

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Monthly CPI data

-Oil prices are dropping.

Oil went from over $120 this year, down to under $80.

We are also about to enter the seasonally low demand months this year. So it could fall further. On top of that, while on paper OPEC said it would make more cuts, in reality they are still behind their quota, meaning they still need to raise outputs. Plus, demand is once again taking a big hit in China.

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Oil prices dropping since June's peak

-Housing costs are cooling off, consumers are still spending (black Friday had record sales), shipping costs are going back down to pre-covid level.

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Inventory increasing while sales are decreasing

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Shipping cost dropping (similar benchmark happening in most places).

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Bad news:

-Inverted yield curve.

Normally, the longer you lend money, the higher the yield. CDs, bonds, etc, are supposed to give you better returns the longer you're willing to wait to maturity.

This has gone ass backwards, the longer you lend, the lower the yield.

Which can only mean one thing, the market is expecting long term pain and recession.

However, this is based on market reaction and people's expectations. It has often been a good indicator, but is not always a guarantee.

And things get a little more complicated, as Feds could change the rate hikes and terminal range expectations, etc…

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Yield curve inversion

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-Potential real estate correction or even crash.

The housing market got its prices artificially pushed due to covid and supply chain restrictions. Making real estate prices go sky high in a short time.

With the supply chain recovering, construction picking up again, supply in the market increasing, while demand isn't keeping up due to mortgage rates, it's expected that we will see a correction here, and possibly a big one.

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-Unemployment in the US is remaining low.

Despite some recent layoffs in the news, November actually still ended up with 260,000 more jobs, and with wages up 0.6%.

Why is that bad news? It's probably good news short term for the average person. But the Fed is trying to push more unemployment to tackle inflation. If they can't tackle inflation, it means more rate increases, which will be bad news for stocks, crypto, and most markets. Which also means no soft landing.

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-China crisis.

Can't spell FUD without China.

There's a lot of different crises going on around the world. And there's definitely concerns across Europe. And never any shortage of concerns in the middle east.

But China is taking the cake right now.

China went from a real estate collapse, to a banking crisis, to a complete economic crisis, to now a social crisis.

Things are falling apart, and it will affect the rest of the world.

Granted, the last big economic crisis in China only briefly caused a small correction to markets around the world. Due to its isolation in a lot of its economic aspects, and increased disconnection. But this one is on a bigger level.

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There's obviously more good news and bad news, but I picked what I thought would be key for crypto right now, and was clear and not muddled.

Conclusion:

There's no point in pledging absolute allegiance to team bull or team bear, or get married to one narrative. Things are more complex than that.

The only sure thing, is there's a recipe for volatility.

I've only highlighted a very small sample, of just the one I personally believe are important drivers outside of crypto right now, which could enter into the crypto market.

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What do I personally see in my crystal ball?

This is just my personal opinion.

It's possible that stocks continue to rally, but that's too optimistic in my opinion, and I more likely see a new low coming up. But this doesn't necessarily mean crypto will find a new low.

Crypto is more volatile, and moves faster than the stock market. So it's not inconceivable that it could end its bear market before stocks.

If Bitcoin does still drop, because of more bad events, I can't see it doing more than $12.7K.

The sellers and selling pressure has been overextended already and squeezed out to its last drop.

You can see evidence of that with the latest bad news in recent months not having as big of an effect as earlier this year, or as big as expected. Even when stocks dropped hard in more recent months, Bitcoin hasn't responded as much as it did earlier this year.

Recent Fed rate hikes, China FUD, SEC FUD, MT Gox Fud, barely moved Bitcoin.

At the same time, crypto has increasingly shown inconsistencies with its correlation to stocks, and even macros.

The correlation has been decreasing for the last few months:

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Decreasing correlation with the S&P500

So much of the selling pressure has already been squeezed out. Most of the people who would panic out, have already panicked out. And in terms of percent drops, we are right where we would expect to be right now….even with a black swan event.

The question is if enough of the selling pressure has been squeezed out to avoid a new low. Making prices too good for the market not to start accumulating. If enough of the bear market has already run its course for crypto. If we've already pretty much decoupled from stocks.