League of Traders Weekly Report (3rd 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 third week of June!
- Bitcoin Chart/Ethereum Chart
Last week, Bitcoin fell from $69,000 to $65,000 and is currently showing weakness at $66,650. The decline was driven by a reduction in the expected number of base rate cuts by the US Federal Open Market Committee (FOMC) from three to one. Since then, Bitcoin has been trending sideways, with volatility sitting within 1%.
The Bitcoin spot exchange-traded fund (ETF) experienced a shift from a net inflow trend that lasted about three weeks to a net outflow. From June 10th to 14th, Bitcoin spot ETFs saw a net outflow totaling $580.6 million. Grayscale (GBTC) and Ark Investment (ARKB) led these outflows. According to BeInCrypto, on June 17th, BlackRock’s ETF and Index Chief Investment Officer (CIO) Samara Cohen stated, “Hedge funds and securities firms are actively purchasing Bitcoin spot ETFs,” but noted, “Qualified investment advisors are hesitant to purchase Bitcoin spot ETFs due to high price volatility.”
Ethereum dropped from $3,692 last week to $3,400 before rebounding to $3,622 this week. Compared to Bitcoin, Ethereum showed a significant recovery in price last week. Bloomberg analyst Eric Balchunas reported that the Ethereum (ETH) spot ETF is likely to begin trading in the United States starting July 2nd. With expectations for inflows from Ethereum spot ETFs, Ethereum appears to be in an upward cycle.
Bitcoin dominance decreased from 55.25% last week to 55.13% this week, primarily due to Ethereum’s relative strength. Other altcoins were generally weak, especially those with high trading volumes on Korean exchanges, which recorded even steeper declines. With Korea’s Virtual Asset User Protection Act set to take effect on July 19th, there are rumors of potential delistings of altcoins from Korean exchanges. As a result, altcoins like IQ and Kyber Network (KNC) have fallen sharply by more than 10% per day.
2. Major Economic Indicators
- US Bond Yields
The US 10-year bond yield fell from 4.441% last week to 4.242% this week. This decline followed the US Federal Reserve’s decision to freeze interest rates for the seventh consecutive time and a slowdown in the US Consumer Price Index (CPI) reported in May. Although the FOMC reduced the projected number of interest rate cuts this year to one, some analysts believe the market still expects two or more cuts.
- US Dollar Index
The US dollar index rose slightly from 105.089 last week to 105.569 this week. This increase occurred despite a long-standing decoupling from Treasury yields. CNBC reported that this trend emerged after the Bank of Japan’s (BOJ) June financial policy decision meeting, which was viewed as dovish by investors, causing the yen to weaken and consequently boosting the dollar.
- US100 (Nasdaq 100)
Due to the decline in US government bond yields, the NASDAQ and S&P 500 indices reached new record highs in the New York stock market. The Nasdaq 100 index rose sharply from 18,993 last week to 19,674 this week. The slowdown in the US CPI in May and the Federal Reserve’s assessment of moderate inflation progress contributed to this surge. Apple, in particular, saw its stock price rise by over 7% after introducing an AI system called ‘Apple Intelligence’ at the World Developers Conference (WWDC 2024), reaching its highest stock price and market capitalization ever.
- Gold Futures
Gold futures prices have remained relatively stable, moving from $2,295 per ounce last week to $2,327 per ounce this week. Investors are maintaining a wait-and-see attitude ahead of major economic indicators and central bank policy announcements. The cessation of gold purchases by China’s central bank suggests that further increases in gold prices might depend on finding new catalysts for growth.
3. Bitcoin Market Data
- MVRV Z-score
The MVRV Z-score decreased slightly from 2.44 last week to 2.22 this week. This score, which had been elevated since the rise that occurred earlier this year, has now returned to its March levels. If Bitcoin’s price increases further, the score could potentially rise again.
- 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 fell slightly from 1.019 last week to 1.008 this week, but the daily indicator remains above 1, signaling that the bull market continues.
- 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 combined perpetual futures open interest on exchanges decreased from $18.21 billion last week to $17.43 billion this week, though it remains at a high level. Despite the decline in open interest, the combined estimated futures leverage ratio on exchanges increased slightly from 0.202 to 0.203, suggesting that fund inflows into the futures market of virtual asset exchanges are stagnant.
4. On-chain data
- Exchange inflows and outflows
Bitcoin has been experiencing a net outflow from exchanges over the past month. A consistent outflow of funds from exchanges can be positive for long-term price trends. Despite the outflow of funds from the Bitcoin spot ETF last week, it appears that Bitcoin is being accumulated externally by institutions or whale investors, rather than through ETFs.
- Number of Whale Wallets
The number of whale wallets holding more than 10,000 Bitcoin has rebounded, returning to the levels seen last April. This increase in whale wallets during the current adjustment phase is a positive sign for Bitcoin’s future price trend.
5. Last Week’s Major News
- Korea Reviews 600 Virtual Assets for Listing Maintenance; Problematic Assets May Be Delisted
With the Virtual Asset User Protection Act going into effect next month, virtual asset exchanges in Korea will review the listing status of approximately 600 virtual asset items currently being traded. This review will occur quarterly, with problematic assets being designated as cautionary stocks and potentially delisted. Korea’s 29 virtual asset exchanges, including the five major won-denominated exchanges (Upbit, Bithumb, Coinone, Korbit, and Gopax), have reported to financial authorities that they will support the continued listing of these 600 virtual assets, pending an initial screening.
- Federal Reserve Hawkish Loretta Mester Says More Improvement Needed in Price Index for Rate Cuts
On June 14th, Cleveland Federal Reserve President Loretta Mester, known as a hawkish member of the U.S. Federal Open Market Committee (FOMC), stated that further improvements in price indicators are necessary before considering an interest rate cut. In an interview with CNBC, Mester described the recent positive trends in price indicators as “welcome news” but emphasized the need for continued progress. “I would like to see better indicators in the coming months,” Mester said, adding that inflation should slow and short-term inflation expectations should decline.
- Bitcoin Miner Exchange Transfers Reach Two-Month High Amid Reduced Mining Revenue
On June 12th, CoinDesk reported that the volume of Bitcoin transferred by miners to exchanges has reached a two-month high. According to on-chain analytics firm CryptoQuant, this surge in transfers comes as the price of Bitcoin approaches $70,000. The increase in miner transfers is attributed to reduced mining revenue following the recent Bitcoin halving event.
6. Major economic events
- Major economic events last week
The most significant economic event last week was the US interest rate decision and the FOMC announcement on June 13th. The US Federal Reserve decided to freeze interest rates. In the dot plot released on the same day, many Federal Reserve members anticipated one interest rate cut by the end of this year. However, new unemployment claims exceeded forecasts, and the producer price index declined, causing US bond yields to fall sharply. This led the market to predict that two or more interest rate cuts might be possible by year-end.
This week’s major economic events
This week, the Eurozone Consumer Price Index and the US Retail Sales Index are set to be released. Last week, the producer price index showed signs of decline, recording a negative figure for the first time in a long while. If retail sales also stabilize or decrease this week, expectations for a US interest rate cut are likely to increase further.
Summary
Positive indicators: US bond yields, aSOPR, Exchange inflows and outflows, Number of whale wallets
Negative indicators: Bitcoin spot ETF fund outflow, US dollar index, Open interest
Overall Review: While US bond yields have fallen and the stock market reached new highs following the FOMC announcement last week, Bitcoin has been relatively sluggish. This is primarily due to miner selling, prompted by decreased productivity after the halving, and the recent shift of Bitcoin spot ETF funds from inflows to outflows. If miners continue to sell in the short term, Bitcoin’s weakness may persist. However, despite this weakness, the passing of the US Federal Reserve’s June announcement and signs of controlled US inflation suggest that virtual assets, including Bitcoin, are likely to enter an upward trend after this period of adjustment.
