League of Traders Weekly Report (3rd 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 third week of June!
- Bitcoin Chart/Ethereum Chart
The price of Bitcoin fell below 25k since the news of the U.S. Securities and Exchange Commission (SEC) filing against Binance US and Coinbase earlier this month, though it has rebounded slightly and is currently hovering around the mid-26k range. To reverse the current downward trend, it is crucial that Bitcoin strongly breaks above 28k during the rebound. If it surpasses 28k and manages to stabilize above 27.5k, it could be considered a shift toward an upward trend. However, if it remains below that level, the downward trend is likely to continue.
The price of Ethereum dropped from about $1800 to the $1600s before recovering at the early $1700s. Although Ethereum was not directly mentioned in recent security issues related to altcoins, there is a growing concern that it may not be immune to security issues after the transition to a proof-of-stake consensus mechanism. This concern has led to a decrease in staking volumes, while the price has also undergone some adjustments. However, Ethereum is considered one of the coins with the lowest likelihood of being classified as secure, apart from Bitcoin, so the possibility of additional security-related issues in the short term seems low.
In terms of market capitalization, Bitcoin dominance has surpassed 49%, reaching a new high this year. This is strongly related to the previously mentioned issue surrounding altcoins. The SEC’s position states that 19 coins, including Solana, should be regarded as stocks or financial commodities, which has garnered significant attention in the market. This has led to a simultaneous decline in the prices of related tokens and caused a significant decrease in the overall market capitalization of altcoins.
2. Major Economic Indicators
- US100 (Nasdaq 100)
Last week, the Nasdaq 100 continued its upward trend, moving from the 14,000s to over 15,000. Nasdaq has been setting new highs since late April of last year and has been on an eight-week streak of consecutive gains since then. This can be attributed to the resolutions of three major uncertainties in the US economy this year, including major bank failures, poor corporate earnings, and debt ceiling negotiations. Some interpret this year’s gains as the beginning of a rally, and there is potential for more upward movement.
- US Dollar Index
The US dollar index dropped down to the 101s due to the Federal Reserve’s interest rate freeze and the European Central Bank’s interest rates climbing higher. There are differing views regarding the Fed’s interest rate freeze, with some seeing it as a temporary halt to further rate increases. Therefore, there is a higher possibility of the US dollar index finding support around the 100 level rather than continuing its downward trend.
- Gold Futures
The gold futures market has not shown a significant rebound despite the decline in the US dollar index. There is a high likelihood that gold prices may transition into an upward trend once the US interest rate hikes come to an end. The price of gold futures has maintained a certain level of correlation with Bitcoin prices throughout this year. The rebound in gold prices could potentially serve as a signal for a Bitcoin rally, so it should be closely monitored.
- US Bond Yields
The US 10-year bond yield has increased slightly to 3.769%. It is anticipated that in June, until the decision on additional interest rate hikes is made at the July FOMC meeting, the yield will likely exhibit range-bound movements at the current levels.
3. Bitcoin Market Data
- MVRV Z score
The MVRV Z-score is situated at around 0.4 and its continuous decline indicates a potentially favorable buying range for a medium to long-term standpoint. If the MVRV Z-score approaches 0 or comes close to it during additional price declines, buying more Bitcoin may be worth considering.
- 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
Currently, aSOPR is still hovering around 1. To confirm a trend reversal, aSOPR should consistently record values above 1, indicating the beginning of a bullish market.
*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
Open interest decreased last week and has since then seen a slight increase. However, its current state does not indicate a significant buildup of open interest, suggesting the possibility of a market crash due to low futures liquidation.
4. On-chain data
- Exchange inflows and outflows
Carrying on from last week, there is still an ongoing net outflow of positions from exchanges. The outflow of coins from exchanges can help reduce selling pressure and potentially have a positive impact on the price of Bitcoin.
- Number of Whale Wallets
There hasn’t been a significant fluctuation in the number of whale wallets holding over 10k BTC. As mentioned in the previous analysis, it’s important to closely observe whether the number of whale wallets decreases or increases around the 30k price level during upward movements. If the number of whale wallets continues to increase or remains stable even during price increases, there is a higher probability of further upward movement.
5. Last week’s major news:
- Following Haru Investments’ withdrawal suspension, Delio has also implemented a withdrawal freeze.
Following the sudden suspension of deposit and withdrawal services by cryptocurrency asset manager Haru Investments, a similar platform named Delio, has also implemented a withdrawal freeze on the 14th. Haru Investments attributed the issue to false information provided by their delegated operator, B&S Holdings. It is estimated that B&S Holdings may have funds locked up on a scale worth hundreds of millions of dollars due to the FTX bankruptcy. It remains to be seen whether this incident will lead to bankruptcies for Haru Investments and Delio, going beyond a banking crisis.
- SEC cracksdown on altcoins
The SEC has deemed 19 coins, including BNB and Solana, as financial commodities. As these altcoins are listed on most major cryptocurrency exchanges, if exchanges were to halt trading support or delist these coins, it is expected that this would lead to a chain reaction of negative events such as a mass exodus of investors and a sharp decline in prices. Consequently, these coins have experienced significant drops in value. In response, the Solana Foundation strongly argued that Solana is not a security threat, taking a direct approach by addressing the controversy. It remains to be seen whether major exchanges like Coinbase will comply with the SEC by delisting the coins deemed as stocks, or if they will maintain their listing based on the foundation’s argument. This situation has garnered significant attention.
6. Major economic events
- Major economic events last week
The most significant events of last week were the interest rate decisions in the United States and Europe. The U.S. Federal Reserve decided to keep interest rates unchanged, while the European Central Bank increased rates by 25 basis points, which lead to the weakening of the U.S. dollar index. However, concerns about inflation expressed by some members during the FOMC meeting temporarily caused a decline in the price of Bitcoin.
- This week’s major economic events
This last Monday was Juneteenth in the United States, which means financial markets were closed or had shortened trading hours due to the public holiday. The most notable event of the week will be Federal Reserve Chair Jerome Powell’s testimony. On the 21st and 22nd, Powell will appear before Congress to deliver a semiannual testimony on monetary policy. He will testify before the House Financial Services Committee on the 21st and the Senate Banking Committee on the 22nd. It is important to pay attention to Powell’s remarks regarding U.S. interest rates and monetary policy during these testimonies.
Positive indicators: U.S. Dollar Index, exchange outflows
Negative indicators: Gold futures, aSOPR
Overall Review: Last week, Bitcoin dropped below 25k followed by a modest recovery. If it surpasses 28k, we can expect more technical rebounds. However, concerns about interest rate hikes remain for July, and in the current situation, it may be more favorable to employ a short-term trading strategy rather than hoping for a rally this week.
