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 first week of December!

1. Bitcoin Chart/Ethereum Chart

On December 4th, the price of Bitcoin sat at $41,500, having broken through the 38K mark at the top of the range. The market has risen to reflect that the US Securities and Exchange Commission is expected to approve most of the 12 applications for Bitcoin spot ETFs just before the January 10th deadline. Noted analyst Mike Alfred predicted that ETF participants, including Black Rock and Fidelity, will not be able to buy spot at market prices; he expects institutions to buy Bitcoin at a premium and prices above $60,000 in two-week intervals. While there is the possibility of a correction due to overheating as Bitcoin explodes in the short term, there is also the possibility of additional inflows due to fear of missing out on funds, so there is room for further gains at the current price point.

BTCUSDT Chart (Binance)

The price of ETH has risen significantly from $2049 last week to $2256 this week, as the total circulating supply on the Ethereum network has been declining in line with the Ethereum spot ETF. “The pace of ETH issuance has been slowing in recent weeks due to a series of validator exits,” said Glassnode. In addition, increased network activity has resulted in more ETH being burned through EIP 1559, which has pushed the network back into a deflationary state in which ETH is burned more than it is issued.

At around 45% of its all-time high, Ethereum has risen less than Bitcoin, which has reached 60% of its all-time high. Ethereum is reportedly likely to be approved for a spot ETF alongside Bitcoin, so a strategy of increasing Ethereum’s weight whenever it is relatively weak should be considered.

ETHUSDT Chart (Binance)

Bitcoin’s dominance jumped significantly from 52.66% last week to 53.74% this week. As expected, the relative weakness of major altcoins relative to Bitcoin drove Bitcoin’s dominance higher last week. We expect Bitcoin’s dominance to remain strong or flat until the approval of the Bitcoin spot ETF in January next year.

Bitcoin dominance chart (CoinMarketCap)

2. Major Economic Indicators

• US Bond Yields

The US 10-year Treasury rate fell significantly from 4.484% to 4.239%. Late last week, the bond market showed a buying bias related to Chairman Powell’s comments, interpreting them as a sign that a rate cut is closer. However, there is also a perception that a decline in bond rates of over 10 basis points in such a short time is excessive. There are also concerns that the upcoming December FOMC meeting could result in more hawkish comments. Therefore, we believe that bond rates have priced in some short-term decline, and a neutral position is in order.

US10YPrice Government Bond Rate (TradingView)

• US Dollar Index

The U.S. dollar index is trading flat in the U.S. at 103.342 after a big drop and short-term recovery. After falling for three consecutive weeks in anticipation of a rate cut, the dollar index is expected to trade near its current level.

• US100 (Nasdaq 100)

The Nasdaq 100 is unable to break above the 16000 resistance level as bond yields have not fallen further, leaving the index under pressure from its highs. However, JPMorgan analysts Ellen Wang and Andrew Tyler remain positive about the stock market, stating that optimistic U.S. GDP growth, improving corporate profits, and the U.S. Federal Reserve stopping its rate hikes is a formula for a bull market in equities. Wang went on to say that each of these factors is favorable for the market, and we would see more upside pressure internally.

US100 (TradingView)

• Gold Futures

After hitting a six-month high last week, gold futures have rallied significantly this week, breaking above 2100 and reaching new all-time highs. After hitting a new peak, we are seeing some profit-taking selling at the current price levels. Once this is fully digested, a strong break above $2100 will likely set the stage for a sustained rally.

Gold Futures (TradingView)

3. Bitcoin Market Data

• MVRV Z-score

The MVRV Z-score is 1.36, a significant increase from last week. While the MVRV Z-score is increasing in the direction of overvaluation, the current levels around 1.3 are not in the realm of overvaluation. If we see MVRV Z-scores above 3 over the next year or so, we will start to see overheating in the market. We may see a slight correction from the current levels, but it is too early to make a call.

• 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 1.026, up from last week and consistently above 1. This shows that Bitcoin’s price is breaking through the 38K resistance level and entering a solid bull market.

• 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 is at $9.96B, the highest it’s been this year. While the combined estimated leverage ratio of exchanges is not high at 0.208, the size of the open interest alone has reached a concerning level. We should be cautious of the current open interest size as there has been a pattern of significant price declines when the open interest size exceeded $9B in May and August.

Outstanding Open Interests by Exchanges (Glassnode)

Exchanges’ combined estimated leverage ratio (Glassnode)

4. On-chain data

• Exchange inflows and outflows

Bitcoin positions on exchanges show outflow dominance. Many view this as institutional buying in anticipation of increased demand for Bitcoin spot as the approval of a Bitcoin spot ETF approaches. There is also speculation that institutions that are planning to launch ETFs, such as Fidelity and BlackRock, are also increasing their Bitcoin holdings through custodians in preparation for the launch of their spot ETFs.

Bitcoin: Exchange Net Position Change (Glassnode)

• Number of Whale Wallets

With the rise in the price of Bitcoin, the number of whale wallets holding 10K+ Bitcoin has decreased to its lowest point of the year, which means that some of those wallets have realized short-term profits. If the number of whale wallets increases as the price rises, we can still identify it as a buy zone and expect a long-term price increase. However, if the number of whale wallets decreases, as it did last week, it would mean that some of the whales with 10K+ in assets believe that the current price point is a short-term peak. On the flip side, it could also mean that whale profit-taking has been affected by higher demand, bumping up the price of Bitcoin.

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

5. Last Week’s Major News

• Crypto fund inflows largest in 2 years on spot ETF expectations

Cryptocurrency fund inflows hit their highest level since the 2021 bull market, according to a new report, as anticipation of a Bitcoin spot ETF pushed inflows last week. According to the latest report from Coinshares on November 27, crypto fund inflows from crypto asset managers such as 21shares, Coinshares, Bitwise, Grayscale, and Proshares, totaled $346 million last week, more than double the previous week’s inflows ($176 million) and the largest weekly total since the bull market in late 2021. Cryptocurrency funds have now seen nine consecutive weeks of gains, pushing year-to-date inflows past $1.5 billion.

• Standard Chartered “Bitcoin to hit $100,000 late next year”

Global financial group Standard Chartered has maintained its outlook for Bitcoin to reach $100,000 by the end of 2024. In April, Standard Chartered published a report warning that the crypto winter (the downturn of the crypto market) was finally over and that Bitcoin prices could reach $100,000 by the end of 2024. According to Coindesk US, Jeff Kendrick’s team at Standard Chartered hypothesized that the next catalyst for Bitcoin’s rise is the approval of US-based Bitcoin spot ETFs.

• Bitcoin hits 20-month high…tops $41500

Bitcoin has hit its first peak in 20 months, rapidly increasing its price over the past weekend, and successfully reaching the 40K mark. In addition to Bitcoin, other major cryptocurrencies such as Ethereum have also shown gains.

Major Economic Events for the 5th week of November 2023 (Investing.com)

This week’s major economic events

This week, we’ll be looking at the US nonfarm payrolls and unemployment rate. If the US GDP comes in higher than expected and the employment data is also strong, the Fed will have even less incentive to lower interest rates. Therefore, a bad number on the employment front is likely to be positive for asset markets.

Major Economic Events for the 1st week of December 2023 (Investing.com)

Summary

Positive indicators: US bond rates, gold futures, MVRV Z-score, aSOPR, exchange outflows and inflows

Negative indicators: Open interest, number of whale wallets

Overall Review: Last week, Bitcoin made a strong breakout above the $38K resistance. On-chain indicators such as the MVRV Z-score and aSOPR are good, and macroeconomic indicators such as US Treasury rates are also positive for the crypto market. However, a short-term correction cannot be ruled out given the significant increase in open interest and the decrease in the number of whale wallets holding more than 10K Bitcoin. Therefore, this week, it is recommended to maintain your current portfolio rather than make any hasty changes.