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 February!

1. Bitcoin Chart/Ethereum Chart

As of February 26th, the price of Bitcoin continues to trade sideways at the 51500 level. This is a breathing space similar to the one we saw in December of last year, and the lack of trading volume in the short term makes it unlikely that the price would drop**.** Furthermore, with the powerful headwind of Bitcoin’s halving due in April of this year fast approaching, we expect the price to remain bullish until we see a sharp increase in the MVRV Z-score or the aggregated futures estimated leverage ratio of exchanges, which we will discuss later in this report.

BTCUSDT Chart (Binance)

Ethereum’s price has risen significantly in comparison to Bitcoin, surpassing $3000 last week. The anticipation of the approval of an Ethereum spot ETF in May has continued to drive buying interest, while news of ETH burning by the network’s internal mechanisms and a decrease in circulating supply is also driving further price gains. Ethereum’s price has risen so much in the short term that we may see a small correction due to profit-taking, but until the hype around the spot ETF fades, we expect it to continue its long-term uptrend.

ETHUSDT Chart (Binance)

Bitcoin dominance dropped from 53.29% to 52.62% last week, largely due to the strong rise of the top altcoin, Ethereum. With the strong headwinds of Bitcoin’s halving in April still present, Bitcoin dominance will consolidate or strengthen from the current levels rather than decline further.

Bitcoin dominance chart (CoinMarketCap)

2. Major Economic Indicators

• US Bond Yields

U.S. Treasury rates have remained unchanged from 4.283% last week to 4.280% this week. The lack of favorable macro data on inflation hasn’t led to further increases in bond rates over the past week. Given the current gap between short- and long-term rates on US Treasuries, it’s unlikely that US 10-year Treasury rates will fall significantly until economic data from the US worsens.

US10YPrice Government Bond Rate (TradingView)

• US Dollar Index

The US Dollar Index fell slightly from 104.222 last week to 103.828 this week. As with US Treasury rates, the Dollar Index is unlikely to fall significantly until US economic data worsens. However, since U.S. stocks, which are dollar-denominated assets, have recently been rallying vigorously and reaching new highs, if U.S. stocks were to experience a correction, the Dollar Index would likely move higher as well.

US Dollar Index (TradingView)

• US100 (Nasdaq 100)

The Nasdaq 100 is reaching new highs again and sits near 18000. Semiconductor stocks such as Nvidia are showing historic strength due to the AI trend, and other large-cap tech stocks such as Microsoft and Meta are also showing solid price action. However, some investors see the current price level as a not affordable area to buy more tech stocks, so the 18000s may be met with resistance.

US100 (TradingView)

• Gold Futures

The price of gold futures bounced slightly last week, from 2021 to 2027, but remains largely unchanged. As expectations for the timing of rate cuts continue to be pushed back, the price of gold futures, an asset favored by low interest rates, is likely to from sideways to downwards.

Gold Futures (TradingView)

3. Bitcoin Market Data

• MVRV Z-score

The MVRV Z-score decreased slightly from 2.01 to 1.95. The current reading near 2 can be interpreted as an early entry stage of overheating. Historically, MVRV Z-scores nearing 6 have often signaled a peak, so there is room for further upside.

• 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 has been hovering around 1.025 for the past week without much movement. Since the fourth quarter of last year, the aSOPR has remained consistently above 1, indicating that the long-term uptrend is ongoing.

• 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.

• Open Interest

Bitcoin’s exchange-traded perpetual futures open interest decreased slightly from $12.6B last week to $12.43B this week. The estimated futures leverage ratio also decreased slightly from 0.194 to 0.191. While the level of open interest is high, the estimated futures leverage ratio hasn’t increased significantly despite Bitcoin’s currently elevated near-term price range which suggests that there is further upside at current prices.

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 grown in size as the outflow dominance continues, which is a positive leading indicator for Bitcoin’s price, and likely indicates that institutional investors or whales are scooping up Bitcoin and transferring to external wallets.

Bitcoin: Exchange Net Position Change (Glassnode)

• Number of Whale Wallets

The number of whale wallets holding more than 10K Bitcoin rebounded slightly last week. It is noteworthy that the number of whale wallets is increasing, even with the price of Bitcoin above $50K. We could see further gains for Bitcoin in the near term.

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

5. Last Week’s Major News

• Spot ETF expectation brought the price of Ethereum to over $3000

The price of Ethereum has surpassed $3000 for the first time in two years. In anticipation of the approval of an Ethereum spot exchange-traded fund, market experts have predicted that the price could go up to $3500. “We are very close in this move to levels around $3,150-$3,300,” said Kenny Hearn, chief investment officer at SwissOne Capital, “the next level after that would be $3,600 and we think this is quite easily attainable in the next month or so”.

• Terra Kwon Do-Hyung repatriates to the United States

Terraform Labs CEO Do-Hyung Kwon, a key figure in the Terra-Luna collapse, will be extradited to the United States 11 months after his arrest in Montenegro. According to local newspaper Poveda, the High Court of Podgorica, Montenegro, decided to extradite Mr. Kwon to the United States on November 21st, 22 months after he fled to Singapore shortly before the Tera-Luna collapse. According to the Montenegrin court, Mr. Kwon has three days to appeal. Goran Rodic, Kwon’s local legal representative, has signaled his intention to appeal, citing the illegality of the decision. Kwon and former Terraform Labs chief financial officer Han Chang-Joon were arrested on March 23rd at Podgorica International Airport in Montenegro on suspicion of falsifying official documents while attempting to board a chartered flight to Dubai using fake passports. At the time, South Korea’s Ministry of Justice requested criminal extradition from Montenegrin authorities for both men, but only Han was extradited to South Korea to face trial.

• GBTC records lowest outflows since ETF conversion

Outflows from the Grayscale Bitcoin Trust (GBTC) have hit a new low in recent days, signaling a slowdown in withdrawals. According to BitMEX Research data, GBTC saw daily outflows of $44.2 million on Thursday, the smallest daily outflow since GBTC was converted to an exchange-traded fund last month. GBTC has seen a total of $7.4 billion in outflows over the period, with about 76% of that coming in the last month. However, capital outflows from GBTC are likely to intensify. A U.S. bankruptcy court recently approved the sale of $1.3 billion worth of GBTC held by crypto lender Genesis.

6. Major economic events

• Major economic events last week

The US economic data released last week confirmed that inflation in the US remains strong, with new jobless claims coming in below forecasts, indicating that the labor market remains robust. Meanwhile, existing home sales also came in above forecasts, indicating that the residential real estate market is not doing too badly. As a result, US interest rates remain bullish and the consensus is still that the next US rate cut will be in May or later.

Major Economic Events for the 3rd week of February 2024 (Investing.com)

This week’s major economic events

This week, the US GDP for the first quarter and the January inflation rate will be released. The US economy is doing well, so the GDP is expected to be good. It will be interesting to see if the GDP growth rate exceeds forecasts, as a good US economy is unlikely to have a positive impact on asset markets.

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

Summary

Positive indicators: MVRV Z-score, aSOPR, futures leverage ratio, exchange outflows and inflows, number of whale wallets

Negative indicators: Open Interest, US Bond Rates, US100

Overall Review: Bitcoin’s price moved sideways last week, but metrics such as the MVRV Z-score and aSOPR indicate a continuation of the bull market. In addition, increased exchange outflows and an increase in whale wallets may indicate a short-term bullish trend for Bitcoin. Bitcoin’s strength may be followed by an altcoin bull run, so a strategy that maintains Bitcoin allocation while gradually increasing the allocation of major altcoins may work for the short term.