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 October!

1. Bitcoin Chart/Ethereum Chart

As of October 24th, Bitcoin’s price rose to 34,700, lightly breaking through the 30k resistance, as the volume accumulated during the last three-quarters of sideways movement appears to be taking hold. With sentiment shaping up to approve a Bitcoin spot ETF issue, attention is now focused on whether Bitcoin can continue to rally. With a very strong breakout near 30k, there is little resistance in the medium to long term other than 38k and 46k. We should also leave open the possibility of a short-term correction, as the volume accumulated between 26k and 28k this year may be sold off to realize short-term profits. However, even in the event of a correction, we do not expect Bitcoin to lose much ground, as there are still strong headwinds in the form of the official approval of a Bitcoin spot ETF and the halving of Bitcoin.

BTCUSDT Chart (Binance)

Ethereum’s price rose from $1550 to the $1800s in the last week. Ethereum has been weakening against Bitcoin for some time now, but this rise could be the start of a new upward momentum for the pair. However, the chances of Ethereum outperforming Bitcoin are still not expected to be high, as the current price action has been accompanied by a rise in Bitcoin dominance over Bitcoin spot.

ETHUSDT Chart (Binance)

Bitcoin’s dominance over MarketCap hit a two-year high, surpassing 50%. Bitcoin’s dominance has steadily risen from about 38% at the start of the year, and now exceeds 54%, the highest level since April 2021. This rise in dominance is attributed to the Bitcoin rally, which has seen the price of Bitcoin surge by over 100% since the start of the year.

Bitcoin dominance chart (CoinMarketCap)

2. Major Economic Indicators

• US Bond Yields

The U.S. 10-year bond rate reached 5% at one point last week intraday but has since corrected slightly and is now hovering around 4.8%. Some experts see the upper end of US bond rates rising as high as 5.5%. The spike comes on the heels of Fed Chairman Powell’s comments that the rise in long-term bonds is likely due to an increase in the term premium — the reward for holding Treasuries for longer periods — and that the Fed will continue to monitor volatility in the bond market. However, with yields on U.S. Treasuries up more than 1.5% this year alone, and even if they rise further from current levels, it’s hard to see them continuing to rise, with the top end of the range expected to be around 5.5%. The view that U.S. Treasury yields will remain at current levels for some time and then peak at some point next year is also gaining a lot of support in the market.

US10YPrice Government Bond Rate (TradingView)

• US Dollar Index

The U.S. Dollar Index fell slightly to 105.4, after hitting 106.5 last week. While the U.S. 10-year Treasury yields have been moving downward with resistance at 5%, the dollar index has also been falling in tandem. The Japanese yen is also likely to hold at the current levels or weaken rather than strengthen further, as there is a consensus that the Japanese government will intervene once the yen reaches ¥150 per dollar.

US Dollar Index (TradingView)

• US100 (Nasdaq 100)

The Nasdaq 100 dropped to 14500 before slightly rebounding. In the case of Nasdaq, unless the current geopolitical issues in the Middle East are resolved, we are likely to see a consolidation rather than a surge in the near term. However, we expect relatively strong earnings from major tech companies due this week, so we could see a sideways drop to the downside from current prices rather than a sharp drop.

US100 (TradingView)

• Gold Futures

The price of gold futures has rebounded to 1980, benefiting greatly from the safe-haven phenomenon and preceding the rise of Bitcoin. If US interest rates and the dollar index continue to drop, the price of gold could rise above $2000.

Gold Futures (TradingView)

3. Bitcoin Market Data

• MVRV Z score

The MVRV Z-score spiked from 0.49 to 0.9. This is still well above the 5+ overheating zone that Bitcoin has been in for some time and is well within the range of the bull market, so it’s worth keeping an eye on the MVRV Z-score to see if it can rise any more shortly.

• 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.

Bitcoin: MVRV Z Score(Glassnode)

• aSOPR

The aSOPR is at 1.03, showing a bullish pattern of consistently being above 1. If aSOPR is consistently above 1, we can assume that a bull market is underway, so we should look at that number relative to 1.

• 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.

Adjusted SOPR (Glassnode)

• Open Interest

Open interest in Bitcoin perpetual futures hit a high of $8.4B last week before falling back to around $8.3B as some positions were closed during the surge. The fact that open interest did not increase during the price rally could be a positive for further gains as it reduces volatility due to liquidation. We see the $9B open interest we saw at the end of March and the end of August as a high level of short-term volatility risk from liquidations, so the risk of a sharp drop due to liquidations is still low.

Outstanding Open Interests by Exchanges (Glassnode)

The exchanges’ combined estimated futures leverage ratio dropped significantly to 0.20, which could be interpreted as a drop in leverage due to the liquidation of short positions. With leverage levels currently low, there is a small risk of a sharp drop, but the potential for a spike via a short squeeze in the futures market is also limited, and price movements are likely to be triggered by the Bitcoin spot market for the foreseeable future.

Exchanges’ combined estimated leverage ratio (Glassnode)

4. On-chain data

• Exchange inflows and outflows

Exchange Bitcoin outflows and inflows have shifted from neutral to outflow dominance again, which, if interpreted positively, could indicate a growing number of long-term holders who are willing to continue holding Bitcoin in external wallets, even at current prices. It would be worthwhile to closely monitor exchange outflows and inflows as a possible sign of a short-term top when Bitcoin, which has been steadily flowing out of exchanges since June of this year, starts flowing back into them.

Bitcoin: Exchange Net Position Change (Glassnode)

• Number of Whale Wallets

Last week, the number of whale wallets above 10K continued to increase rather than decrease, as the price of Bitcoin continued to rise. We have noted that an increase in the number of whale wallets when the price of Bitcoin is holding or rising can be a leading indicator for further gains. However, we have seen a decrease in the number of whale wallets since the spike. This should be taken with a grain of salt, as it could be interpreted that these whales have realized short-term profits from the surge.

Number of Bitcoin wallets holding 10K or more(Glassnode)

**5. Last week’s major news:

• Cryptocurrency Market Cap to Top $1 Trillion if Bitcoin Spot ETF Approved

In a recent report, data analytics firm Cryptoquant predicted that if a bitcoin spot exchange-traded fund (ETF) is approved, bitcoin would become a $900 billion asset, and the overall cryptocurrency market would grow to $1 trillion. In its report, Cryptoquant argued that the first wave of institutional adoption in 2020–2021 will come from institutions adding bitcoin to their balance sheets, and the next wave could be financial institutions offering bitcoin access to their clients through spot ETFs.

• Tesla Releases Quarterly Report…Maintains Bitcoin Holdings

Electric car maker Tesla (TSLA) did not buy or sell any Bitcoin (BTC) in the third quarter, leaving its holdings unchanged, as reported by CoindeskUS. There was no mention of Bitcoin in Tesla’s Q3 report, which means the company left its Bitcoin holdings unchanged in Q3. With the current price of Bitcoin at $28,300, Tesla holds about $275.4 million (9720 BTC) worth of Bitcoin.

• DWF Labs Founder “Some Coins Will Explode This Week”

Andrei Grachev, co-founder and managing partner of crypto market maker and investment firm DWF Labs, took to X (formerly Twitter) to say, “When every news are taken like a bullish sign — market is bullish. As I said a month ago — low volume, and low liquidity, but things are certain and settled, bad news didn’t impact the market. The best time.” He also added, “Some interesting things will happen this week, some coins should explode, let’s see. The market will bring some magic to us”.

6. Major economic events

• Major economic events last week

Last week, US 10-year yields rose as US crude oil inventories declined and FED Chairman Powell expressed concerns about inflation and tolerance for higher US long-term bonds. However, the market has since calmed down, with US 10-year yields falling to some extent around the 5% mark.

Major Economic Events for the 3rd week of October 2023 (Investing.com)

This week’s major economic events

This week, we’ll also be paying attention to US crude oil inventories and the FED Chair’s speech. If the decline in crude oil inventories is lower than expected and the FED makes hopeful comments about inflation, it could be a positive signal for asset markets, including Bitcoin.

Major Economic Events for the 4th week of October 2023 (Source: Investing.com)

Summary

Positive indicators: Bitcoin charts, Bitcoin governance, MVRV Z score, aSOPR, open interest, exchange inflows, and outflows

Negative indicators: US Treasury rates, Nasdaq 100, number of whale wallets

Overall Review: Bitcoin had a great week last week. Now that it has broken out and vigorously breached the 30k resistance, we expect a volatile bull run for the time being. Open interest is not high, and valuation metrics, such as the MVRV Z-score, have not yet entered the overheating zone, so even if there is a correction, it is likely to have downside rigidity. Keeping in mind the possibility of additional rallying at current prices, we’d look into a strategy of buying Bitcoin on every correction or consolidation or buying major altcoins that have not yet rallied significantly, to perform well.