League of Traders Weekly Report (2nd week of June 2024)
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 second week of June!
- Bitcoin Chart/Ethereum Chart
Bitcoin surged to $72,000 last week, though it once again plummeted below $69,000 after stronger-than-expected non-agricultural employment indicators dampened hopes for an interest rate cut. It has since shown signs of recovery. According to Coinglass data, the sharp drop on the 7th resulted in $296.82 million in liquidated positions within an hour, with long positions accounting for the majority at $285.2 million, and short positions at $11.62 million.
In the event of further decline, $67,000 is expected to serve as short-term support. Conversely, if Bitcoin trends upwards, breaking through $72,000 , which it failed to surpass during this decline, will be crucial. Surpassing $72,000 could signal a high likelihood of reaching a new all-time high.
The U.S. Bitcoin spot ETF saw net inflows for 19 consecutive days. On the 7th, there was a net inflow of $132 million into Bitcoin ETFs, equivalent to 1,915 BTC, which is more than four times the daily mining amount of 450 BTC. While ArkInvest’s ARKB and Grayscale’s GBTC experienced outflows, Blackrock’s IBIT and Fidelity’s FBTC saw inflows that exceeded these outflows. Funds through spot ETFs are predominantly from institutional investors, who tend to maintain positions longer than individual investors on virtual asset exchanges. Therefore, the continuous inflow into Bitcoin spot ETFs is likely a significant factor driving Bitcoin’s price increase.
Ethereum’s price fell from $3,773 last week to $3,692 this week. Ethereum’s recent underperformance compared to Bitcoin can be attributed to anticipated sluggish demand for Ethereum spot ETFs and ongoing inflation since April. However, with expectations for inflows into the Ethereum spot ETF, it may be reasonable to consider that Ethereum is in the middle of an upcycle, presenting a buying opportunity during this dip.
Bitcoin dominance rose from 54.58% last week to 55.25% this week. As funds continue to flow into Bitcoin spot ETFs and meme coins decline due to the weakness of GameStop stocks, Bitcoin dominance is trending upward. Bitcoin dominance has ranged between 53% and 57% since March and is expected to stay within this range for the foreseeable future.
2. Major Economic Indicators
- US Bond Yields
The US 10-year bond interest rate rose from 4.406% last week to 4.441% this week. With inflation falling short of expectations and a strong labor market, many analysts believe that the current interest rates, the highest in 23 years, will not be lowered before September. On September 9, AFP reported that the expected number of interest rate cuts has been reduced from three to two. Consequently, US bond yields have rebounded rapidly, and we are now awaiting the US interest rate decision this week.
- US Dollar Index
The US dollar index increased from 104.165 last week to 105.089 this week. Similar to US bond interest rates, better-than-expected employment indicators have pushed the dollar index higher along with Treasury yields. The European Central Bank is facing interest rate pressures for the first time since September 2019. The dollar index will likely fluctuate based on the upcoming US interest rate decision and the FOMC press conference this week, making these events crucial to monitor.
- US100 (Nasdaq 100)
The US100 index reached new historical highs, climbing from 18,531 last week to 18,993 this week. NVIDIA’s stock price soared following the release of new AI products, driving up semiconductor-related stocks such as NVIDIA and Micron, as well as companies like Autodesk and Moderna, which boosted the Nasdaq 100 index. Some analysts suggest that the high performance of the Nasdaq 100 is causing a relative decrease in funds flowing into virtual assets. From this perspective, a decline in the Nasdaq 100 could potentially trigger a rise in Bitcoin.
- Gold Futures
Gold futures prices fell below $2,300 per ounce last week, going as low as $2,295 per ounce. Expectations for US interest rate cuts are diminishing, and China’s central bank has ceased purchasing gold, which may lead to further adjustments in gold prices for the time being.
3. Bitcoin Market Data
- MVRV Z-score
The MVRV Z-score increased slightly from 2.36 last week to 2.44 this week. This range suggests that further price increases are possible, indicating that Bitcoin is not yet significantly overvalued.
- 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 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
aSOPR fell slightly from 1.027 last week to 1.019 this week but remains above 1, signaling that the bull market is ongoing.
- aSOPR is short for Adjusted Spent 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
Bitcoin’s exchange-combined perpetual futures open interest rose significantly from $16.42 billion last week to $18.21 billion this week, marking the highest level recorded by Glassnode. The estimated futures leverage ratio also increased from 0.193 last week to 0.202 this week. Both open interest and leverage ratios have risen substantially without significant price changes, indicating the potential for sudden price fluctuations.
4. On-chain data
- Exchange inflows and outflows
Bitcoin on exchanges has consistently shown an outflow advantage over the past three weeks. This trend, occurring alongside the inflow of funds into Bitcoin spot ETFs, is expected to positively impact Bitcoin’s mid- to long-term price rise.
- Number of Whale Wallets
The number of Bitcoin whale wallets holding 10,000 BTC or more remains low since last week, the lowest level recorded. This indicates limited capital inflow from new large players at the current price, even as Bitcoin hovers near historical highs. However, with the launch of Bitcoin spot ETFs, institutional investment in Bitcoin is increasing without direct wallet exposure, making it difficult to conclude that whale holdings have decreased.
5. Last Week’s Major News
- The ECB Lowered Interest Rates, But When Will the US Federal Reserve Follow? ‘First Cut in September’ Highly Expected
As the European Central Bank (ECB) lowered its benchmark interest rate on the 6th (local time), the world’s attention is now turning to the U.S. Federal Reserve (Fed). The base interest rate of the United States, issuer of the dollar — the primary global reserve currency — is currently the most important economic indicator worldwide, drawing significant focus during key economic events. Despite the ECB changing its policy direction for the first time in about two years, it is unlikely that the U.S. Federal Reserve will immediately follow suit and lower interest rates.
- Arthur Hayes: “It’s Time to Buy Bitcoin and Altcoins” — Why?
Arthur Hayes, co-founder of the BitMEX cryptocurrency exchange, has recommended that investors buy Bitcoin and promising altcoins, predicting an imminent Bitcoin bull market. According to Bitcoinist, Hayes recently stated in a blog post titled “Group Of Fools” that the cryptocurrency bull market is reviving, emphasizing that Bitcoin will be one of the most profitable cryptocurrencies during this bull cycle.
- Coins Plummet by 30% Following Binance Delisting Announcement
On the 4th, Binance announced that it would delist OmiseGo (OMG), Waves (WAVES), Raptenem (WNXM), and NEM (XEM). The reason for the delisting was explained as considering project development activities, transaction volume, smart contract stability, and other factors. Following Binance’s announcement, NEM fell 32%, and Waves dropped 30% within the day.
6. Major economic events
- Major economic events last week
Last week, most inflation-related indicators fell below forecasts, leading to a rise in virtual assets due to expectations of an interest rate cut. However, these assets fell sharply following the announcement of the non-agricultural employment index. The index reported 272,000 new jobs, significantly exceeding the forecast of 182,000, indicating that the U.S. job market remains robust. This suggests that inflation may persist due to strong personal consumption in the United States.
This week’s major economic events
This week, a crucial event will shape the direction of the global asset market: the US interest rate decision and the FOMC meeting. With US policy interest rates currently high, both US stock markets and Bitcoin prices are near historic highs. Despite high inflation indicators in the US, the European Central Bank has recently lowered interest rates, potentially putting pressure on the US. Depending on the US interest rate policy announced this week and the accompanying dot plot, market volatility could increase significantly.
Summary
Positive indicators: Bitcoin spot ETF fund flow, Exchange inflows and outflows, aSOPR
Negative indicators: US bond yields, US dollar index, Open interests, Estimated leverage ratio
Overall Review: Last week, Bitcoin experienced a solid rise due to inflows from the Bitcoin spot ETF but fell sharply following the announcement of the US non-agricultural employment index. This week, the focus will be on the US policy interest rate decision and the FOMC meeting. Bitcoin perpetual futures open interest and the estimated leverage ratio are at their highest levels since these metrics have been tracked. Both macroeconomic and internal Bitcoin indicators suggest heightened risk ahead of these major events, so investors should be prepared for significant volatility.
