Market Signals Are Clustering: Volatility First, Resolution Next
Markets remain volatile on the surface. We have government shutdowns, policy uncertainty, commodity shocks, and sharp positioning resets — yet beneath the noise, a growing number of historically reliable indicators are clustering around inflection points.
Across Bitcoin, equities, dollar liquidity, sentiment, and PMI data, the pattern is familiar: stress first, stabilization next, and expansion afterward — if confirmation follows. This report focuses on repeatable, data-driven signals with forward-return history, while separating temporary volatility catalysts from durable trend drivers.
1. Bitcoin & Crypto Liquidity Signals
Bottoming and re-acceleration signals are converging
Bitcoin / Gold (Weekly RSI)
Weekly RSI has dropped below 36. Each prior instance marked a local Bitcoin bottom, reflecting relative capitulation versus hard assets.
Bitcoin (Open Interest vs 180-Day EMA)
A major Open Interest flush occurred on January 31 with OI below its 180-day EMA. Similar setups marked local bottoms in October 2023, August 2024, and April 2025.
Why this matters: Falling OI reflects forced deleveraging. Weak hands are cleared and downside risk compresses before the next trend leg.
Bitcoin (Short-Term Holder MVRV Z-Score)
Price between $76k–$83k corresponds to -1 to -1.5 standard deviations. This zone marked local bottoms in August 2024 and April 2025, signaling short-term holder capitulation.
Source: https://twitter.com/FrankAFetter/status/2017051240769745027?s=20
Bitcoin (Short-Term Holder Supply in Loss Ratio)
The share of short-term holder supply in loss is approaching levels seen in August–September 2024 and April 2025, periods that coincided with local bottoms.
Bitcoin (True Market Mean)
Bitcoin has fallen below its True Market Mean for the first time since July 2023, which occurred early in the current bull cycle. Historically this reflects deep mean-reversion opportunities, not trend failure.
Source: https://twitter.com/FrankAFetter/status/2017788350480949421?s=20
Bitcoin (2-Week RSI)
The 2-week RSI is approaching a zone that previously marked major cycle bottoms, indicating longer-term momentum compression.
Bitcoin (Spot ETF Cost Basis)
Since January 2024, Bitcoin has consistently found support near the average spot ETF cost basis, suggesting institutional demand absorption.
Section Summary
Bitcoin is displaying a rare confluence of bottoming and reset signals across derivatives positioning, holder stress, momentum, and institutional cost basis. Historically, these clusters have appeared near local lows and have preceded consolidation phases that resolve higher, rather than marking cycle termination.
2. Dollar, Liquidity, and Sentiment Backdrop
US Dollar Index (Death Cross)
A DXY death cross has triggered. Historically, Bitcoin was 100% positive one year later with a median return of +200%.
US Dollar Index (4-Year Rate of Change)
The 4-year rate of change in DXY has fallen to 0%. This has occurred only five times since 1971, with the S&P 500 100% positive one year later and an average return near 19%.
S&P 500 (Investors Intelligence Bulls–Bears)
The Bulls–Bears spread has climbed above 46% for the first time in over a year. Historically, the S&P 500 has been 100% positive one year later with an average return of 15%.
Section Summary
Dollar momentum is easing while sentiment and risk appetite are rebuilding. Historically, this backdrop has supported equities first, with crypto and higher-beta assets following once liquidity conditions continue to improve.
3. PMI, Growth Cycle, and Risk Appetite
US Manufacturing PMI (Break Above 50)
US PMI has crossed above 50 for the first time in over three years, reaching 52.6. Historically, PMI in this zone has coincided with Bitcoin expanding for 300+ days and accelerating later in the cycle.
Global Manufacturing PMI (Bonus Depreciation & 2017 Analog)
Bonus depreciation historically boosts capex and PMI. The current environment most closely resembles 2017, when PMI moved above 50, small caps outperformed, and crypto accelerated later in the cycle.
Source: https://twitter.com/i/grok/share/ad492675020e458f9dee405bef1396f7
Macro Risk Appetite (2020 vs 2026 Checklist)
Matthew Hyland’s macro checklist comparing 2020 vs 2026 shows many of the same conditions present that preceded the prior risk-on acceleration, suggesting appetite is more likely to speed up than slow down if PMI confirms.
US Manufacturing PMI (Expansion Confirmation Risk)
PMI must remain above 50 for multiple months to confirm expansion. Single prints are insufficient.
US Manufacturing PMI (Head-Fake Risk)
January 2024 and January 2025 both saw false breaks above 50, followed by a drop below 50. Confirmation requires persistence.
Section Summary
PMI has delivered an important early expansion signal, but history is clear that confirmation requires persistence. If PMI remains above 50 for multiple months, prior cycles suggest leadership shifts toward small caps and crypto, reinforced by improving liquidity and accelerating risk appetite.
4. US Policy Uncertainty & Volatility Catalysts
US Fiscal Policy (Government Shutdown)
A US government shutdown is confirmed. Polymarket projects a duration of at least four days. Historically this increases short-term volatility but has not produced lasting trend reversals.
Section Summary
Policy uncertainty and government shutdowns tend to amplify short-term volatility but have historically failed to override underlying liquidity-driven trends unless prolonged. Markets typically refocus on macro and liquidity signals once headline risk fades.
Closing Summary
Beneath the surface volatility, the data continues to tilt in a familiar direction. Bitcoin has absorbed forced deleveraging and holder stress, dollar pressure is easing, sentiment is improving, and PMI is flashing early expansion signals. While policy uncertainty and PMI head-fakes can drive near-term noise, history suggests that if PMI remains above 50 and liquidity conditions continue to improve, the path of least resistance favors a broader risk-on phase with small caps and crypto positioned to benefit disproportionately.
Indicator Summary
| Instrument | Indicator Name | Insight (Stats-First) | Source Link |
|---|---|---|---|
| Bitcoin | 2-Week RSI | Approaching zone that historically marked major cycle bottoms | https://x.com/MatthewHyland_/status/2017661266429362307?s=20 |
| Bitcoin | Open Interest vs 180D EMA | OI flush marked local bottoms in Oct 2023, Aug 2024, Apr 2025 | https://x.com/altcoin_screenr/status/2017924217472241901?s=20 |
| Bitcoin | Spot ETF Cost Basis | Price supported near ETF cost basis since Jan 2024 | https://x.com/dailychartbook/status/2017183379301548473?s=20 |
| Bitcoin | STH MVRV Z-Score | -1 to -1.5σ zone marked prior local bottoms | https://x.com/FrankAFetter/status/2017051240769745027?s=20 |
| Bitcoin | STH Supply in Loss Ratio | Stress levels similar to Aug–Sep 2024 & Apr 2025 | https://x.com/FrankAFetter/status/2017970256916910574?s=20 |
| Bitcoin | True Market Mean | First break below mean since July 2023 | https://x.com/FrankAFetter/status/2017788350480949421?s=20 |
| Bitcoin / Gold | Weekly RSI | RSI <36 historically marked local Bitcoin bottoms | https://x.com/Crypflow/status/2017327691796529364?s=20 |
| DXY | 4-Year Rate of Change | S&P 1Y later 100% positive, ~19% avg | https://x.com/SethCL/status/2016228897407287663?s=20 |
| DXY | Death Cross | Bitcoin 1Y later 100% positive, median +200% | https://x.com/altcoin_screenr/status/2017567887402180977?s=20 |
| Macro | 2020 vs 2026 Checklist | Similar macro conditions suggest accelerating risk appetite | https://x.com/MatthewHyland_/status/2018364370556694775?s=20 |
| S&P 500 | Bulls–Bears Spread | >46%; S&P 1Y later +15% avg | https://x.com/TheMarketStats/status/2017991179363840322?s=20 |
| US Fiscal Policy | Government Shutdown | Polymarket ≥4 days; historically short-term volatility | https://x.com/pizzintwatch/status/2017693457234485731?s=20 |
| US PMI | Expansion Persistence | Must remain above 50 to confirm regime | https://x.com/sminston_with/status/2018363090291847561?s=20 |
| US PMI | Head-Fake Risk | Prior Jan false breaks in 2024 & 2025 | https://x.com/TXMCtrades/status/2018340785360445472?s=20 |
| US PMI | PMI Level (52.6) | PMI >50 historically led 300+ day BTC expansions | https://x.com/Sykodelic_/status/2018409453834616850?s=20 |
Large Caps
Here’s the sample data on altcoin outperformance:
For large caps, here’s the ones that stand out on a long term timeframe:
- WhiteBIT Coin
- BNB
- TRON
Model Portfolio Update
Despite all the fear, this is still a great spot to add to positions. Open positions are -29%.
The overall portfolio performance considering closed positions is roughly a -27% return:
