League of Traders Weekly Report (3rd 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.
This week’s report was delayed due to the researcher’s summer holiday and contains data based on Wednesday, August 16. We apologize for the delay. Here are our notes for the third week of August!
- Bitcoin Chart/Ethereum Chart
The price of Bitcoin, which was hovering around 29,000 at the start of last week, is still sitting around 29,000. Additionally, the gentle downward trend of the 25-day moving average (MA) has continued. Looking at the repeated patterns since the beginning of the year, the chart has shown a trend of sharp increases after a downward trend in the short term. With the assumption that the downward trend will continue for the time being, it’s important to pay attention to when the trend might change.
Ethereum has also exhibited a gradual downward trend along with Bitcoin, reducing its volatility. Last week, it came down from the 1840s to the 1820s, showing a slightly greater decrease compared to Bitcoin. As further declines could potentially be more significant than Bitcoin’s, caution is advised.
Bitcoin dominance, in terms of market capitalization, rose from 50.30% to 50.49% last week. The London-based asset management company, Jacobi Asset Management, which is launching a Bitcoin spot index fund ETF in Europe, is also maintaining expectations for the launch of a Bitcoin spot ETF in the U.S. market. Due to major altcoins like Ethereum showing relative weakness, there’s a high possibility that Bitcoin dominance will increase in the short term.
2. Major Economic Indicators
- US Bond Yields
On the 16th, the 10-year US Treasury yield reached its highest level in 15 years. The yield on the 10-year Treasury bond closed at 4.258%, marking the highest level since June 2008 based on closing prices. This is the highest level in 15 years, going back to the months prior to the Lehman Brothers crisis in June 2008. The Wall Street Journal reported that investors are tense about the possibility of a sharp rise in bond yields and market instability.
- US Dollar Index
Last week, the US Dollar Index rose from 102 to about 103 this week. The strength of the US dollar has been driven by the possibility of further interest rate hikes in the US.
- US100 (Nasdaq 100)
Last week, the Nasdaq 100 dropped from 15,200 to 15,000. This seems to be a reaction to the release of the minutes from the Federal Reserve’s meeting on the 16th. The minutes revealed officials’ intentions to lower the inflation target to about 2% and mentioned the possibility of further interest rate increases. Due to the rise in long-term US bond yields and the strength of the dollar, major asset markets like Nasdaq showed a declining trend.
- Gold Futures
The price of gold futures has been consistently declining and is hovering around 1,900. Similarly to Nasdaq, this can be interpreted as a relative decline due to the rise in US interest rates and the US dollar index.
3. Bitcoin Market Data
- MVRV Z-score
The MVRV Z-score is recording around 0.6, showing little significant change compared to last week. Similar to the perspective of the previous week, the current MVRV Z-score level is historically low. Therefore, in the case of further decline, actively purchasing Bitcoin should be considered when the MVRV Z-score is below 0.5.
- 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 is close to 1. With Bitcoin’s price volatility at its lowest level in three years, it’s anticipated that there won’t be any significant fluctuations until price volatility picks up.
*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
Starting this week, figures related to Bitcoin’s perpetual futures will be utilized. The open interest for Bitcoin perpetual futures decreased last week but began rising again around the 15th. This can serve as a catalyst to create price volatility.
The aggregated estimated leverage ratio (orange lines) on exchanges has been steadily increasing over the past month. As the leverage ratio increases during a period of low price volatility, volatility will likely manifest in the near future.
4. On-chain Data
- Exchange inflows and outflows
The amount of Bitcoin held on exchanges, which had been decreasing since the end of May, has converged to almost zero. If the Bitcoin supply that had been withdrawn from exchanges for the last 2 months has transitioned into the holdings of long-term investors, coupled with the news about Bitcoin spot ETFs in the 4th quarter, this could lead to expectations of a bullish trend.
- Number of Whale Wallets
The number of whale wallets holding over 10k Bitcoin remains relatively stable. Observing the number of whale wallet increases during price fluctuations in the current 29k price range could provide hints for medium to long-term price movements.
5. Last week’s major news:
- Bernstein: “Stablecoin Market to Grow to $3 Trillion Within 5 Years”
The stablecoin market is projected to grow from its current value of $125 billion to $2.8 trillion within the next 5 years. Investment bank Bernstein stated in a research report on the 9th that stablecoins would become a “growth flywheel” by integrating with consumer platforms, securing users, and expanding distribution.
- SEI Expected to Approach $500 Million Market Cap After Listing on Binance
Ahead of the listing of the SEI token on Binance, it is forecasted that the market capitalization of the token will surpass 40 thousand. CoinDesk US reported on the 10th that the SEI would have a market capitalization of around $486 million after listing on Binance. According to data from the decentralized exchange Aevo, traders anticipated that SEI would be traded at around 26 cents on Binance immediately after listing.
- SEC Extends Review of Bitcoin Spot ETF
The U.S. Securities and Exchange Commission (SEC) has extended the review period for a Bitcoin spot index fund ETF application submitted by Ark Investment. On the 11th, CoinDesk reported that the SEC issued an order soliciting public opinions on the “ARK 21Shares Bitcoin ETF” application. This is a common step taken to postpone a decision. The SEC has a total of 240 days to make a final decision after commencing the application review.
6. Major economic events
- Major economic events last week
Last week, U.S. consumer inflation came in below expectations, and the UK’s GDP showed positive signs. However, higher-than-expected initial jobless claims raised concerns about employment.
- This week’s major economic events
This week’s most significant event is the release of the Federal Open Market Committee (FOMC) meeting minutes on the 16th. At the time of writing this report, the minutes have already been released. The minutes contained more hawkish content than anticipated, suggesting a need to bring inflation down to the 2% range. As a result, the U.S. 10-year bond yield reached its highest level in 15 years, and the dollar index also surged. Consensus on a rate freeze at the upcoming FOMC meeting next month, which was anticipated, has seen a shift. Given the mention of the possibility of further rate hikes by the Federal Reserve, this is a point of focus.
Summary
Positive indicators: Exchange inflows/outflows, Nasdaq 100, gold futures
Negative indicators: U.S. 10-year bond yield, dollar index
Overall Review: This week, asset markets are showing weakness due to the rise in U.S. bond yields and the strength of the dollar, driven by the release of the FOMC meeting minutes. It’s important to monitor how long these issues will persist. Even if Bitcoin experiences short-term declines, considering a strategy of accumulating more in case of significant downturns could be advisable, given the potential approval of a Bitcoin spot ETF and for the longer term, positive factors like next year’s Bitcoin halving.
