League of Traders Weekly Report (1st week of June 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 June!
- Bitcoin Chart/Ethereum Chart
The price of Bitcoin has experienced a slight decline from the higher 27k range to the lower 27K range. It failed to hold the short-term support level of 27.5K and has been unable to continue maintaining the upward trend. In the event of a correction, the previous support level of around 25.5k is expected to act as the first support level. It is important to see if it can vigorously break through 28k during upward movement.
The price of Ethereum has also seen a slight decline at about $1890, compared to last week’s $1880, but the magnitude of the decline is smaller than Bitcoin’s. As mentioned in the last week’s analysis, there is a higher possibility that the price fluctuation of Ethereum will be more limited than Bitcoin due to decreased liquidity and supply.
The Bitcoin dominance in terms of market capitalization has slightly declined from a low 48% to a mid-47%. With no significant events this week, it is expected that Bitcoin’s dominance will move from the range of 47% to 49%, which has been observed from March until now.
2. Major Economic Indicators
- US100 (Nasdaq 100)
Last week, the Nasdaq 100 index continued to rise from 14,300 to about 14,500. The Nasdaq index reached its highest point since the end of April last year and has maintained a six-week consecutive weekly uptrend. The ongoing decoupling trend between Nasdaq and Bitcoin, as well as the possibility of short-term outflows from technology stocks that dominated the Nasdaq, should be noted.
- US Dollar Index
The U.S. Dollar Index has further risen from 103.8 to 104.1. The strength of the dollar will be determined by the upcoming FOMC meeting next week, where a decision on the interest rate will be made.
- Gold Futures
Gold futures experienced a slight increase last week, but then dropped again, reaching 1,940. The price of gold futures has been moving in a strong negative correlation with the recent U.S. Dollar Index. Therefore, if the U.S. Dollar Index rises and faces resistance, it may lead to an increase in the price of gold futures.
- US Bond Yields
The U.S. 10-year bond yield declined slightly from 3.773% to 3.716%. The U.S. bond yields are also expected to be greatly influenced by events such as the FOMC meeting in the second week of June. This week, there is a significant possibility of mixed movements in bond yields.
3. Bitcoin Market Data
- MVRV Z score
The MVRV Z score has slightly declined from 0.55 to 0.50. When the MVRV Z score is below 1, it can be considered undervalued for the price of Bitcoin in the long term. For medium to long-term investors with investment horizons of several months to over a year, this can be considered a favorable buying range.
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-core is below 0, Bitcoin can be considered to be undervalued. In the overheated market that reached the All-Time High (ATH) in 2021, scores of 6 or higher were shown.
- aSOPR
Currently, the aSOPR is 0.99, indicating a slight decline compared to last week’s 1.01, but it is not a significant change. To consider it as the beginning of an uptrend, the average value should consistently record an aSOPR above 1 during the price increase.
- 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 SOPR 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
The number of Bitcoin’s open interest contracts showed a decreasing trend last week. Since the quantity of open interest contracts is not significantly higher than the associated historical data, the price fluctuation due to position liquidation is expected to be limited. When entering a bullish market for Bitcoin, it is important to observe whether the increase in open interest contracts accompanies price increases, as it is highly likely that a price increase accompanied by an increase in open interest contracts could occur.
4. On-chain data
- Exchange inflows and outflows
The dominance of outflow positions in exchanges continued last week, although the magnitude of change decreased. Based on historical data, there is no significant occurrence of large-scale inflows or outflows.
- Number of Whale Wallets
There has been no significant fluctuation in the number of whale wallets holding 10k or more Bitcoin. It is important to closely observe whether the number of whale wallets decreases as it approaches 30k during this price increase.
5. Last week’s major news:
- Ripple preparing for an initial public offering (IPO)
On the 2nd of June, Eleanor Terrett, a business journalist at Fox Business, tweeted “Ripple hosted a private road show (a marketing event where a company and its underwriters meet with potential investors to generate interest in an IPO). I’m told it was attended by just about every reputable institutional investment firm on the Street.” As a result, Ripple’s price showed a concurrent rise, benefiting from this news.
- BitMEX Co-founder Arthur Hayes anticipates a bullish market for Bitcoin in the late third quarter to the early fourth quarter of this year.
In a blog entry posted on the 2nd, Hayes wrote “the real Bitcoin bull market will begin in the late third and early fourth quarter of this year”. He expects the Federal Reserve’s substantial interest payments, which are due to rising interest rates, to result in an additional supply of the US dollar. This in turn is expected to lead capital inflows into risk assets such as Bitcoin.
6. Major economic events
- Major economic events last week
Concerns about a US government default have been temporarily alleviated as President Biden approved a bill to extend the debt ceiling until January 1st, 2025. The Eurozone inflation index showed a performance below expectations. Non-farm payrolls for May increased by 339,000, significantly surpassing the market’s expected figure of 190,000. However, the US unemployment rate and new weekly jobless claims in May exceeded expectations.
- This week’s major economic events
This week, May’s US Consumer Price Index (CPI), which will be announced on the 13th, is expected to have a decisive impact on US interest rates. The FOMC meeting is scheduled from the 13th to 14th. Following a speech delivered by Lorette Mester, the President of the Federal Reserve Bank of Cleveland, on the 5th, the FOMC blackout period will commence. This period entails Federal Reserve officials abstaining from making public speeches.
This week, focus should be on confirming the possibility of the Federal Reserve deviating from its interest rate path based on US inflation data and initial unemployment claims.
Positive indicators: Exchange inflows and outflows
Negative indicators: US Dollar Index, US Treasury yields
Overall Review: Last week, Bitcoin’s price showed a lackluster performance, failing to hold support at around 27.5K. Ahead of the FOMC meeting scheduled for the second week of June, it is expected that risk assets, including Bitcoin, will show mixed movements. Therefore, it would be advisable to exercise caution and refrain from entering large positions in low liquidity and first confirm the direction of the market.”
