League of Traders Weekly Report (3rd week of July 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 third week of June!
- Bitcoin Chart/Ethereum Chart
Last week, Bitcoin fell to $55,000 before rebounding to over $60,000 this week. This rebound is primarily attributed to the assassination of U.S. Republican presidential candidate Donald Trump. Analysts believe the incident has increased Trump’s chances of winning the next presidential election. Trump is considered more favorable to the crypto industry than to President Biden. Consequently, many Trump supporters are now publicly formalizing their support following the attack. For instance, U.S. billionaire and hedge fund manager Bill Ackman, along with Tesla CEO Elon Musk, have officially endorsed Trump.
Additionally, on the 12th, blockchain analysis company Arkham Intelligence announced the completion of a significant sale.
Despite the potential impact of Mt. Gox’s bond repayment, the market adjustment post-halving seems to be concluding. If Bitcoin remains above $58,000, an upward trend is likely.
Following the news of Trump’s attack, there has been an increased inflow of funds into spot exchange-traded funds (ETFs). According to Farside Investors, from July 8th to 12th, BTC spot ETFs saw a net inflow of $1.0476 billion, primarily from Blackrock and Fidelity.
Ethereum also saw a significant rebound, rising from around $2,900 last week to $3,200 this week. With the U.S. Securities and Exchange Commission’s (SEC) approval for an Ethereum spot ETF launch imminent, experts predict Ethereum could soon exceed $4,000. Pinbold referenced analysis from Trading View, stating that Ethereum is on a clear upward trend after establishing a support line around $3,200, and could reach $4,000 within 4–6 weeks as investor momentum builds.
Bitcoin dominance slightly decreased from 55.17% last week to 55.08% this week. Bitcoin dominance has been fluctuating between 53% and 57% post-halving. Benjamin Cowen, founder of Into the Cryptoverse, predicted that Bitcoin dominance (BTC market capitalization compared to the total cryptocurrency market capitalization) could surge to 60% by the end of this year, influenced by changes in monetary policy and historical patterns. In the short term, the inflow of funds into Bitcoin spot ETFs could push Bitcoin dominance close to 57%, the upper end of its current range.
2. Major Economic Indicators
- US Bond Yields
The U.S. 10-year bond interest rate slightly decreased from 4.3% last week to 4.229% this week, continuing its steady decline following the dovish remarks by U.S. Federal Reserve Chairman Jerome Powell. His upcoming speech this week is expected to influence U.S. interest rates further.
- US Dollar Index
The U.S. dollar index dropped from 104.926 last week to 104.286 this week, primarily due to the recent rebound of the Japanese yen. Barring significant volatility in major currencies like the U.S. dollar and the yen, the index is expected to move in tandem with U.S. bond yields this week.
- US100 (Nasdaq 100)
The Nasdaq 100 index, which reached an all-time high last week, adjusted to 20,413 following a sell-off prompted by strong U.S. CPI data. Concerns are rising that major technology stocks, such as NVIDIA, have increased too quickly and may be peaking. However, Super Micro Computer (SMCI) performed well, announcing its inclusion in the NASDAQ 100 index on the 22nd.
- Gold Futures
Gold futures prices have rebounded from $2,385 per ounce last week and are nearing their previous high of $2,403 this week. If the decline in U.S. Treasury yields persists and gold futures surpass their previous high, the likelihood of Bitcoin entering a bull market increases.
3. Bitcoin Market Data
- MVRV Z-score
The MVRV Z-score increased from 1.526 last week to 1.812 this week. During the major inflection points of this year’s rebounds and declines, the MVRV Z-score reached level 2. It remains to be seen whether the score can surpass this level again and establish an upward trend.
- 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
The aSOPR rose from 1.007 to 1.022 last week. However, the daily aSOPR fell below 1 on Monday and Thursday, indicating that the bull market is not sustained.
- 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 perpetual futures open interest grew from $14.33 billion last week to $16.06 billion this week. It is a positive sign for the market that open interest has been resolved to some extent, as it fell below $14 billion during last week’s decline. During the same period, the perpetual futures estimated leverage ratio increased slightly from 0.193 to 0.195. This suggests that new funds have flowed into the perpetual futures market, given the small increase in leverage ratio relative to the rise in open interest.
4. On-chain data
- Exchange inflows and outflows
The Bitcoin held on exchanges has significantly increased since last week. This appears to be a side effect of the German government transferring its Bitcoin holdings to an exchange. If this is viewed as a correction phase within a bull market, similar to January and February of this year, further increases can be expected after profit-taking during the adjustment phase. However, if the number of deposits from miners selling Bitcoin increases, there may be additional downward pressure on Bitcoin’s price in the short term.
- Number of Whale Wallets
The number of whale wallets holding more than 10,000 Bitcoin showed a slight downward trend as the price of Bitcoin rebounded. However, excluding the previously reported German government wallet, the decline is not significant.
5. Last Week’s Major News
- Bitcoin surges after Trump is attacked
Bitcoin, the leading cryptocurrency, soared to $60,000 after news broke that former U.S. President Donald Trump was shot during a campaign rally. The increase in Trump’s election prospects, given his more favorable stance towards the virtual currency industry compared to President Joe Biden, appears to have boosted expectations in the virtual asset market.
- Ripple (XRP) Futures Open Interest rises by 55% in one week, indicating increased bullish sentiment
As the price of Ripple (XRP) has risen sharply, futures open interest has also increased significantly, suggesting traders are betting on a further rise in XRP. According to Coinglass, as of the 15th, the outstanding XRP interest across all cryptocurrency exchanges was $649.04 million, a nearly 55% increase from last week’s $420 million.
- BlackRock’s assets under management surpass $10 Trillion, Bitcoin holdings exceed 300,000 BTC
CoinDesk reported on the 15th that BlackRock (BLK), the world’s largest asset management company, had assets under management (AUM) exceeding $10 trillion in the second quarter. According to BlackRock, the company’s AUM reached $10.6 trillion in the second quarter, marking an approximate 13% increase compared to the same period last year. Earnings per share (EPS) rose from $9.06 to $9.99, and revenue increased by 7.7% to $4.8 billion. BlackRock launched a Bitcoin spot ETF, named ‘iShares Bitcoin Trust: IBIT,’ in January of this year, and the fund currently holds more than 300,000 BTC.
6. Major economic events
Major economic events last week
Last week, U.S. crude oil inventories decreased more than expected, but market interest rates fell as the consumer price index appeared to be stabilizing. Subsequently, a decrease in new unemployment claims and a higher-than-expected producer price index announcement limited the extent of the interest rate decline.
This week’s major economic events
Key economic events this week include Federal Reserve Chairman Powell’s speech and the release of new unemployment claims data. If Chairman Powell adopts a dovish stance similar to his last hearing, market interest rates are likely to fall further. However, if he expresses caution about lowering rates and employment indicators through new unemployment claims show strong results, market interest rates may rebound.
Summary
Positive Indicators: Bitcoin spot ETF, U.S. bond yields, U.S. dollar index, gold futures price
Negative Indicators: aSOPR, exchange inflows and outflows, number of whale wallets
Overall Review: Bitcoin’s price, weakened last week due to the German government’s sell-off of their Bitcoin, rebounded following the attack on presidential candidate Donald Trump. Bitcoin has corrected more than 25% from its previous high and is now rebounding as some outstanding contracts have been resolved, suggesting a positive short-term outlook. However, the potential release of Mt. Gox’s scheduled bond volume and miners’ sale volumes cannot be ignored. A strategy focusing on spot-oriented, incremental purchases might be prudent.
