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 January!

1. Bitcoin Chart/Ethereum Chart

Last week, Bitcoin’s price dropped below 39k, filling the CME gap and rebounding. The Chicago Mercantile Exchange (CME), which trades Bitcoin futures, is closed on weekends, so when the market reopens on Monday the price could jump or plummet. This is known as a CME gap. The Bitcoin CME gap has been steadily filling since 2018, and we’ve mentioned that the CME gap near 39K would be a support level. Once again, the price of Bitcoin filled the CME gap and bounced back strongly to over 43k.

BTCUSDT Chart (Binance)

Ethereum’s price has held up relatively well against Bitcoin on the back of the Denkun upgrade but has fallen significantly against Bitcoin as that favor has slowed. It is currently holding above the 2300 level, and if it can hold above 2200 without breaking, it could trend higher alongside Bitcoin as the long-term trend is pointing rightward.

ETHUSDT Chart (Binance)

Bitcoin Dominance rose from 51.18% last week to 52.60% this week. Though Bitcoin Dominance had significantly dropped due to the events that followed the approval of the spot ETF, it rebounded significantly due to expectations of reduced downside pressure from the ETF issue that originated in Hong Kong and the digestion of the GTBC sell-off. As Bitcoin’s price is likely to remain firm, or even increase further as we approach the upcoming Bitcoin halving in April, Bitcoin Dominance is also likely to see a sideways or gradual rise.

Bitcoin dominance chart (CoinMarketCap)

2. Major Economic Indicators

• US Bond Yields

The US Treasury rate hit 4.047% this week, down from 4.109% last week. After falling below 4% in early 2024, US bond rates have remained in the 4% range. Depending on the content of the FOMC press conference scheduled for this week, bond rate volatility could increase, so it’s worth watching carefully.

US10YPrice Government Bond Rate (TradingView)

• US Dollar Index

The US Dollar Index rose slightly from 103.359 last week to 103.545 this week. Like U.S. bond yields, it has seen a recent rebound after falling sharply earlier this year. The FOMC press conference scheduled for this week will likely reveal how concerned the Fed is about inflation in the U.S., which could lead to changes in U.S. bond yields and the dollar index.

US Dollar Index (TradingView)

• US100 (Nasdaq 100)

The Nasdaq 100 is setting new all-time highs, hitting 17600 this week from 17325 last week. Some experts still expect tech stocks to continue to outperform, as earnings from major tech companies are coming in with numbers that don’t yet reflect a recession. However, the Nasdaq’s march to new highs is unlikely to have a direct impact on Bitcoin, as the correlation between the Nasdaq 100 and Bitcoin has tended to decrease over the past year.

US100 (TradingView)

• Gold Futures

The price of gold futures rose slightly last week from 2021 to 2033, though it wasn’t much of a change. If interest rates start to fall, the price of gold futures could rise, but it’s hard to see a drop in U.S. interest rates in the near term, so we expect gold futures to consolidate around their current price.

Gold Futures (TradingView)

3. Bitcoin Market Data

• MVRV Z-score

The MVRV Z-score rose from 1.19 last week to 1.44 this week, which can still be interpreted as neutrality, neither overvalued nor undervalued, with room for further upside in the long run.

• 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 rose slightly to 1.016 this week after it struggled to hold on to 1.00 last week. If the aSOPR fell below 1, we would consider the short-term trend to have broken, but it held on to 1, indicating that the long-term uptrend has not yet broken.

• 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

The exchange-matched open interest in perpetual futures rose significantly from $9.17B last week to $9.93B this week, which can be interpreted as a significant increase in longs on the positive news that most of the GBTC bids have been digested. On the other hand, the exchange-combined estimated leverage ratio did not increase from 0.186 last week to 0.180 this week, suggesting a further increase in open interest.

Outstanding Open Interests by Exchanges (Glassnode)

Exchanges’ combined estimated leverage ratio (Glassnode)

4. On-chain data

• Exchange inflows and outflows

Bitcoin positions on exchanges have shifted to an inflow advantage. It is important to note that Bitcoin’s inflows to exchanges have increased with the recent price rally, which could lead to some short-term arbitrage selling.

Bitcoin: Exchange Net Position Change(Glassnode)

• Number of Whale Wallets

The number of whale wallets holding 10K+ Bitcoin has risen significantly for the first time in a while. This is the first time in over a year that the number of whale wallets has risen above 40K at the current price point. Therefore, we can expect a scenario where the number of 10K+ whale wallets acts as a leading indicator for the price, leading to further gains.

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

5. Last Week’s Major News

• Global crypto holders up 34% year-over-year

The number of cryptocurrency holders worldwide has reached 580 million, up 34% from last January’s 432 million, according to a new survey. Citing a Crypto.com report, The Block reported that Bitcoin (BTC) accounts for 51% of all held cryptocurrency. ****Bitcoin holders increased 33% to 296 million in December, up from 220 million at the start of last year. The Crypto.com researcher stated that the introduction of audiences to the Bitcoin network last year created a new demand for Bitcoin.

• JPMorgan “GBTC Realizes $4.3B in Gains…Selling Pressure Likely to Ease”

Amid the ongoing selloff in Bitcoin (BTC) via Grayscale’s Bitcoin Trust (GBTC), JPMorgan analyzed in a report today that much of the selling pressure is dissipating. In the two weeks since the launch of the Bitcoin spot exchange-traded fund (ETF), the price of Bitcoin has fallen by more than 20%, JPMorgan said, largely due to profit-taking by investors who bought GBTC at a discount. Before its conversion to a spot ETF, GBTC was one of the few ways to invest in Bitcoin without owning it directly. GBTC is still one of the larger products, with over $20 billion under management. Given the $4.3 billion that has already flowed out of GBTC, investors may have already taken most of their profits, said JPMorgan analyst Nikolaos Panigirtzoglou, which means that the selling pressure on Bitcoin has largely dissipated.

• Hong Kong’s spot ETF application continues…stablecoin regulation discussed

Chinese asset manager Harvest Global Investments has applied for a bitcoin spot ETF with Hong Kong’s Securities and Futures Commission (SFC), Bloomberg reported. Along with the spot ETF application, Harvest Global is in discussions with regulators about Hong Kong’s stablecoin sandbox, according to the report. Bloomberg said Harvest Global, VSFG, RD Technologies, and others are discussing the sandbox plan with the Hong Kong Monetary Authority (HKMA). Earlier, Hong Kong-based financial services firm Venture Smart Financial Holdings said it would launch an ETF that invests directly in Bitcoin in the first quarter of this year. According to local reports, at least 10 fund managers are preparing to launch crypto-based ETFs in Hong Kong.

6. Major economic events

• Major economic events last week

Most of the purchasing managers’ indexes and GDP data released last week showed that inflation remains strong. Crude oil inventories also fell more than expected, raising concerns about inflation. However, the core personal consumption expenditure price index released last Friday came in below expectations, which helped stabilize interest rates and the dollar index.

Major Economic Events for the 4th week of January 2024 (Investing.com)

This week’s major economic events

The fifth week of January brings the first interest rate decision of the year and the FOMC press conference. While most market participants do not expect a rate cut starting in January, if the FOMC press conference drops hints about the timing of a rate cut, the market may react.

The Eurozone’s Consumer Price Index should also be of interest as a leading indicator of inflation outside of the US.

Major Economic Events for the 5th week of January 2024 (Investing.com)

Summary

Positive indicators: aSOPR, whale wallet count

Negative indicators: US bond rates, US dollar index, exchange outflows and inflows

Overall Review: After falling below 39k last week following news of GBTC selling and filling the CME gap, Bitcoin’s price has recovered to 43k on reduced selling pressure and news of a spot ETF from Hong Kong. While Bitcoin-related indicators such as aSOPR and whale wallet counts are not bad, this week is the first US interest rate decision of the new year. It may be a good strategy to watch the market’s reaction to that event and reasonably increase your Bitcoin positions.