League of Traders Weekly Report (1st week of August 2023)
The Weekly Report is our summary of key indicators and recent events in the crypto world that professional traders are closely monitoring. This report and other relevant information are first shared via the official League of Traders Telegram channel.
Here are our notes for the first week of August!
- Bitcoin Chart/Ethereum Chart
Last week, we saw Bitcoin fluctuate between 28,800 and 29,700 on Binance. The consolidation phase that began in June now marks over a month since its start. Despite major macroeconomic events such as the FOMC meeting last week, the market’s response has been relatively subdued, and volatility has decreased significantly. To overcome this market trend, significant external factors are likely needed. From a price perspective, the resistance level for an upward movement is expected at around 32,000, while the support level for a downward movement is anticipated near 28,000.
Ethereum’s price has seen little change compared to last week. Similarly to Bitcoin, it is showing a generally weak consolidation phase, though the overall supply continues to decrease. Over the last seven days, the supply has decreased by 4,800 ETH. Therefore, it is more likely that Ethereum will continue its consolidation rather than experience a sharp decline in the short term.
As for market capitalization, Bitcoin’s dominance stands at 49.77%, slightly lower than last week’s 50.08%. The recent strength of Ripple seems to be the primary reason for this decline in dominance. In the short term, it is expected that the dominance will move within a range of around 50%.
2. Major Economic Indicators
- US100 (Nasdaq 100)
Nasdaq-100 initially declined last week, but later made a rebound, rising from 15,450 to 15,750. This reflects the FOMC’s stance aligning with expectations and the US GDP showing signs of improvement, which contributed to the positive sentiment in the market.
- US Dollar Index
The US Dollar Index has continued to rise and is now positioned at about 101, reclaiming the 100s. Since US interest rates are relatively higher compared to major counterparts like the Eurozone or Japan, it is unlikely that the US Dollar Index will experience a significant decline below 100 in the short term.
- Gold Futures
The prices of gold futures fluctuated, but showed a slight decline compared to last week. Recently, gold futures have displayed a degree of coupling with the Nasdaq. As gold prices have not risen as significantly as the Nasdaq this year, a rally can be anticipated once the US interest rate hike cycle can be expected to end.
- US Bond Yields
The US 10-year Treasury yield has been rising continuously, jumping from about 3.8% last week and reaching a mid to late 3.9%. With higher rates likely to persist for a while, and a high-interest rate environment expected to continue, the US 10-year treasury yield is more likely to maintain a sideways or gradual upward trend, rather than experiencing a steep decline.
3. Bitcoin Market Data
- MVRV Z-Score
The MVRV Z-score has declined from 0.70 to 0.65. Since volatility has decreased and the score has slightly dropped, there is still room for more changes. Investors who are waiting to buy Bitcoin may choose to wait for the MVRV Z-score to decrease a bit more.
- Indicator explanation: The MVRV Z-score is a measure that determines whether Bitcoin’s market cap is overvalued or undervalued by dividing the difference between Bitcoin’s market cap and realized cap by the standard deviation. If the MVRV Z-score is below 0, Bitcoin should be considered as undervalued. In the overheated market that reached the All-Time High (ATH) in 2021, scores of 6 or higher were shown.
- aSOPR
The aSOPR (average Spent Output Profit Ratio) experienced a sharp drop to 0.91 and has since recovered to around 1. Similar patterns were observed in late March, when aSOPR showed a comparable decline and subsequential rebound, so it’s essential to pay attention to this change.
- aSOPR is short for Adjusted Outfit Profit Ratio, a value obtained by dividing the price of received bitcoin in the past by the price at the time of transmission. When aSOPR is less than 1, it indicates a downtrend, and when it is above 1, it indicates an uptrend. aSOPR is a more accurate value that removes meaningless transactions within the hour for adjustments.
- Open Interest
Bitcoin’s open interest also showed a slight decrease last week. The magnitude of the changes in open interests have significantly reduced, indicating that market participants may want to be cautious about entering additional positions.
4. On-chain data
- Exchange inflows and outflows
Since the end of May, Bitcoin holdings on exchanges have been consistently decreasing. This trend could be related to the news of a Bitcoin spot ETF, and there could even be figures accumulating Bitcoin steadily in anticipation of the ETF approval.
- Number of Whale Wallets
There’s been very little change in the number of whale wallets holding 10,000 or more Bitcoins. These whale wallets tend to increase when they buy at lower Bitcoin prices and then decrease as they realize profits when prices rise. When the price of Bitcoin crossed 30,000 this year, the number of whale wallets decreased, indicating resistance to more price increases. If we observe an increase in the number of whale wallets during a correction at the current moment, we might be able to expect a similar rally in the 4th quarter, as seen earlier this year.
5. Last week’s major news:
- Worldcoin launched, Exchanges list it simultaneously.
Sam Altman, the CEO of OpenAI, announced the launch of the cryptocurrency project Worldcoin (WRL) on Twitter, on the 24th. Following the launch of Worldcoin, several cryptocurrency exchanges such as Binance and OKX announced their listing one after the other. However, concerns rose among holders as the price dropped following the disclosure of tokenomics. Vitalik Buterin added to these concerns by providing his opinion on the risks of Worldcoin.
- Twitter relaunched as ‘X’, Musk announces ‘Financial Features’ addition.
Twitter, under the influence of its eccentric owner, is undergoing massive changes. Elon Musk, the CEO of Tesla and Chairman of Twitter’s board, not only changed the name and logo of Twitter, but also announced plans to add a financial feature.
- Federal Reserve raises interest rates by 0.25%… “September hike is uncertain, we’ll see then.”
Following a year and three months of halted interest rate hikes, the Federal Reserve of the United States raised its benchmark interest rate by 0.25 percentage points on the 26th. The Federal Reserve concluded a two-day meeting of the Federal Open Market Committee (FOMC) and raised the benchmark rate to 5.25–5.5%, marking the highest level in 22 years. The FOMC stated that inflation remains at a high level and expressed concerns about the risks of inflation. In order to guide inflation back to its 2% target, the FOMC also mentioned that they would carefully consider additional policy decisions, taking into account the cumulative effects of monetary policy, and the time it takes for monetary policy to affect economic activity and inflation.
6. Major economic events
- Major economic events last week
According to CoinDesk’s market analysis, the US GDP, which was announced last week, grew by 2.4% in the second quarter. This figure is also higher than the 2% of growth from the first quarter, and significantly surpasses the expected 1.8% for this quarter. The Personal Consumption Expenditures (PEC) price index rose by 2.6%, lower than the expected 3.0% and a decline from the first quarter’s 4.1%. Initial unemployment claims were 2,210,000, lower than the expected 2,350,000. Overall, the US economy is growing, and inflation is generally stable, but the figures still show an increase. The labor market remains robust. As a result, asset markets like Nasdaq have risen, but virtual assets like Bitcoin are decoupling and moving independently.
- This week’s major economic events
This week, major macroeconomic indicators in Europe, such as the Eurozone’s Consumer Price Index, and the Manufacturing Purchasing Managers’ Index in Germany and the UK, will be announced. Additionally, on Thursday, the US will release data on unemployment claims, as well as the Services and Non-Manufacturing Purchasing Managers’ Index, which will provide insights into the US real economy. However, it’s worth noting that despite the recent releases of major macroeconomic indicators, prices in the virtual asset market have not shown any significant movements. Therefore, it is recommended to consider these macroeconomic indicators as supplementary information rather than being overly sensitive about them.
Summary
Positive indicators: Exchange inflows/outflows, aSOPR, Open Interest.
Negative indicators: US bond yields.
Overall Summary: Volatility is currently quite low in the virtual asset market. In July, the second red monthly candlestick is expected to be recorded following the last one in May. This suggests that significant short-term price surges in the virtual asset market are unlikely. However, considering the steady outflows from exchanges, the decrease in open interest through futures contracts, and an increase in long-term investor participation, increasing Bitcoin holdings during price declines might be a strategy worth considering.
