League of Traders Weekly Report (4th 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 fourth week of June!
- Bitcoin Chart/Ethereum Chart
Bitcoin has managed to rebound, recovering to $30,000. If it can maintain the support level at $28,500, there is a possibility of more upward movement. However, since the recent increase in price was not accompanied by significant trading volume, it is difficult to consider it as the beginning of a long-term rally. If the price were to continue rising, there could be a possibility of a correction around $34,000, which would an increase of 10% to 15%. Therefore, it would be advisable to reduce exposure and adopt a wait-and-see approach rather than chasing and buying when the price reaches that level.
Ethereum managed to get back to $1,900. It appears that Ethereum’s security concerns are not a huge point of discussion in the market, and there is still the possibility of creating additional momentum with Bitcoin’s continued rise.
Bitcoin dominance, which measures market capitalization against the overall cryptocurrency market, has surpassed 50% for the first time since 2021, reaching 51.5%. This increase in dominance is due to the recent security issues raised by the SEC regarding major altcoins, which consequently resulted in a decrease altcoin market capitalization. The relative strength of Bitcoin is reflected in the significant increase in Bitcoin dominance as the approval of BlackRock’s Bitcoin physical ETF is imminent. There have been applications for Bitcoin ETFs from global asset management firms other than BlackRock, and expectations for Bitcoin are anticipated to remain high for the time being. In the short term, it is forecasted that dominance will either be maintained or increase.
2. Major Economic Indicators
- US100 (Nasdaq 100)
Last week, the Nasdaq 100 experienced a slight correction at 15,000 and is currently positioned around 14,900. After eight consecutive weeks of gains, the index can be seen as entering a consolidation phase. It is expected to show a bearish or consolidating stance until the FOMC meeting in July, where a 25 basis point interest rate hike is anticipated.
- US Dollar Index
The US Dollar Index has seen a slight increase, managing to climb up to 102. Amidst the emergence of hawkish views suggesting the possibility of further interest rate increases in the United States, it is reasonable to expect the US Dollar Index to maintain its current level or experience mild upward movement this week, rather than a decline.
- Gold Futures
Gold futures are showing weakness, along with a slight rise in the dollar index. If the end of the interest rate hike cycle becomes more visible, there could be a possible rally in gold prices. During this period, it is expected that Bitcoin’s price may also be similarly influenced. It could be an effective strategy to increase exposure to Bitcoin during a potential reversal and upward rally in gold prices.
- US Bond Yields
The yield on the US 10-year Treasury bond has slightly decreased to 3.721%. It is expected to remain relatively stable until additional opinions on interest rates emerge at the FOMC meeting in July.
3. Bitcoin Market Data
- MVRV Z score
The MVRV Z-score, has turned bullish along with Bitcoin prices. From a medium to long-term perspective, it is still considered to be within buying range. If the MVRV Z-score drops below 0.2 during a downturn, additional buying 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 has seen a slight increase, recorded over 1. If it continues to maintain values above 1 consistently, it could be considered as an indication of entering a bull market, so it should be closely monitored.
- 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
The open interest in Bitcoin futures has increased significantly along with the rise in Bitcoin price. Given the historically low liquidity over the past few weeks, the increase in positions could have a positive impact from a liquidity perspective. However, in the event of a slight price decline, there is always the possibility of downward movement as liquidation selling occurs. Therefore, it seems prudent to consider quick stop-loss and adopt a wait-and-see approach during a downturn.
4. On-chain data
- Exchange inflows and outflows
This month, there has been a continued outflow dominance of exchange positions. This could be interpreted as an increase in spot purchases due to expectations for physical ETFs. However, it is important to note that if this outflow diminishes, it could be interpreted as a decrease in spot buying pressure or a short-term profit-taking phase. Therefore, it should be monitored closely.
- Number of Whale Wallets
The number of whale wallets holding over 10,000 Bitcoin has decreased. In a previous analysis, it was mentioned that the fluctuation in the number of whale wallets at around 30,000 is important. The whales have shown signs of liquidating their holdings during price increases. Therefore, it can be inferred that the large whales holding over 10,000 Bitcoin currently perceive the current price range not as a continuation of the rally without corrections, but as a potential zone for corrections due to resistance.
5. Last week’s major news:
- BTC dominance has surpassed 50%
Coin Telegraph, citing data analysis platform Trading View, reported that Bitcoin dominance had exceeded 50%, accounting for half of the total market capitalization of the cryptocurrency market (1.1 trillion dollars). This is being interpreted as the impact of BlackRock’s physical ETF application.
6. Major economic events
- Major economic events last week
Last week, statements made by Fed Chairman Powell were a major point of interest. His statement, which recognized stablecoins as a form of currency, created a stir in the cryptocurrency market. Housing indicators in the United States, such as building permits and existing home sales, also did not deviate significantly from expectations.
- This week’s major economic events
This week, we should pay attention to Powell’s speeches scheduled Tuesday and Thursday. Alongside that, key economic indicators such as the US’ 1st quarter GDP and May Consumer Price Index (CPI) will be released, which is expected to cause fluctuations in asset markets.
Positive indicators: Gold futures, exchange inflows
Negative indicators: aSOPR, open interest, whale wallet count
Overall Review: Last week, Bitcoin successfully rebounded and surpassed the $30,000 mark. If the technical rebound continues, there could be potential for a push towards $34,000. However, considering the increase in open interest and the decrease in whale wallets, there is a likelihood of a correction during short-term price increases rather than a sustained rally. Therefore, it would be advisable to reduce exposure during upward movements and adjust the strategy accordingly.
