League of Traders Weekly Report (5th week of May 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 fifth week of May!
- Bitcoin Chart/Ethereum Chart
The price of Bitcoin has risen above 28k thanks to news of the US debt ceiling negotiations being resolved, but it has dropped back to 27k. With increased volatility and signs of upward movement, the upward trend could continue if the support at 27.5k is maintained. If the upward trend persists this week, it is expected to encounter resistance around 30k.In the case of a short-term correction, Bitcoin is expected to find initial support around the previous support level of around 25.5k.
The price of Ethereum has risen to about $1900. Considering the decrease in Ethereum exchange inflows and the continuous increase in its staking volume, the probability of any extreme downward volatility in the price of Ethereum is not high for the time being.
Bitcoin dominance, in terms of market capitalization, has increased from 47% to 48%. Since the steep increase in Bitcoin dominance this past March, it has been moving between 47–49%. It is expected that dominance will continue to fluctuate within that range this week.
2. Major Economic Indicators
- US100 (Nasdaq 100)
Last week, with news of the US government resolving the debt ceiling negotiations, the US 100 index rose from 13,800 to 14,300. Over the past year, it has been a rare event to see both Nasdaq and Bitcoin prices rising together. It is worth paying attention to whether this event can alleviate this year’s ongoing decoupling trend between Nasdaq and Bitcoin.
- US Dollar Index
The US Dollar Index has risen to 103.8 points. As concerns about a US government default have been somewhat alleviated, the dollar is still considered one of the safest assets and is believed to be an example of strength.
- Gold Futures
Despite the rebound in major assets such as Nasdaq and Bitcoin, the price of gold futures continued to decline last week and is currently hovering around 1,940. Since it has recently shown a negative correlation with the US Dollar Index, it is important to pay attention to the US Dollar Index first and foremost.
- US Bond Yields
The US 10-year bond yield has risen further to 3.773%. If US long-term bond yields continue to strengthen, the prices of alternative investment assets are likely to be negatively affected.
3. Bitcoin Market Data
- MVRV Z score
The MVRV Z-Score has increased to 0.55 from last week’s 0.40. Although the MVRV Z-Score has risen, when the value is below 1, it is considered to be undervalued for Bitcoin’s long-term price.
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-core 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, the aSOPR stands at 1.01, maintaining a neutral value near 1. If the price breaks above 30k, we can expect to enter a bullish market with a sustained aSOPR value of above 1.
- 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 number of Bitcoin’s outstanding open interests has increased to levels previously seen in early May, when significant price fluctuations were observed (refer to the Bitcoin price indicated by the black line on the chart below). If the price moves upwards, an increase in the number of open interests can also be expected.
4. On-chain data
- Exchange inflows and outflows
The dominance of outflows from exchange positions continued last week. This can be interpreted as Bitcoin being accumulated at its current price, which is a positive signal for long-term Bitcoin holders.
- Number of Whale Wallets
There have been no significant changes in the number of whale wallets holding 10k or more. If the price remains around 28k, whales are expected to remain on the sidelines. However, if there is a short-term rally above 30k and the number of whale wallets remains stable or increases, more rallying can be anticipated.
5. Last week’s major news:
- Final Agreement Reached on Biden’s Debt Ceiling Negotiations
On the 28th, President Joe Biden announced that he has reached a final agreement with House Speaker Kevin McCarthy on the debt ceiling issue. The final agreement, derived after a previous ‘tentative agreement,’ is expected to be put into effect on June 5th. While a major hurdle has been cleared, the bill still needs to pass through the voting process in both the House and the Senate to officially overcome the federal government’s default crisis. Speaker McCarthy stated that the House will vote on the bill on the 31st.
6. Major economic events
- Major economic events last week
Last week’s debt ceiling negotiation of the US government brought about a rebound sentiment in the overall asset market. Although there are still voting procedures in Congress, the market is optimistic about the vote since there has been a tentative agreement between the President and the House Speaker. The purchasing manager indices of the Eurozone, including Germany and the UK, all fell below expectations. The US core consumer price index slightly exceeded expectations. This announcement indicates that though the economy is still not strong, prices are rising more than expected.
This week’s major economic events:
This week, the focus should be on the debt ceiling vote on the 31st. Although there are fundamental agreements in place, if the Republican Party abstains from voting, there is also the possibility of rejection from the Senate.
Other macroeconomic indicators to watch for include employment indicators such as the unemployment rate in the United States and the release of the Eurozone consumer price index on Thursday, June 1st, and employment indicators such as the unemployment rate in the United States.
Positive indicators: MVRV Z-Score, exchange outflows
Negative indicators: US Dollar Index, US Treasury yields, gold futures
Overall Review: Last week, Bitcoin rebounded as the US debt ceiling negotiations took a positive turn. If there are no issues with the House vote, the short-term upward trend is expected to continue. However, the US Dollar Index and interest rates are negative for risk assets, so there is a high possibility of resistance around 30k.
