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 third week of March!

1. Bitcoin Chart/Ethereum Chart

Bitcoin’s price has significantly corrected since reaching a new all-time high of $73,000 from $68,500 last week, and it currently sits at around $67,000. The new high was accompanied by the largest open interest in history, resulting in a huge correction of about 12.5%, dropping from $73,777 to $64,533 on Binance. More corrections could occur, but support is likely to be found near $61K, and a break above the all-time high of $73K will be needed to shift the move higher.

BTCUSDT Chart (Binance)

Ethereum’s price dropped significantly from $3,845 to $3,588 last week, a correction that was somewhat predictable as it had been moving in one direction with a large open interest for over a month. While the strength of Solana has taken some of the relative attention off of Ethereum, it is possible that Ethereum could reach new historic highs if the issue of an Ethereum spot ETF comes up again. However, Ethereum’s short-term correction could persist, so it’s probably safer to enter the spot market rather than futures.

ETHUSDT Chart (Binance)

Bitcoin dominance dropped slightly from 53.64% to 53.49% this week, likely due to the strength of Memecoin and Solana. As April’s Bitcoin halving approaches, it’s possible that the dominance could rise to the upper end of the current Bitcoin dominance, at about 55%.

Bitcoin dominance chart (CoinMarketCap)

2. Major Economic Indicators

• US Bond Yields

US bond rates rose significantly to 4.3%, up from 4.069% last week, as the market reacted to macroeconomic indicators that inflation remains strong in the US, which has also led to increased market negativity about the timing of rate cuts. Given the increased volatility of US bond rates, it is important to keep an eye on the US Federal Reserve’s interest rate policy announcement scheduled for this week.

US10YPrice Government Bond Rate (TradingView)

• US Dollar Index

The US Dollar Index rose to 103.463 from 102.719. The US Dollar Index, much like US bond yields, is expected to fluctuate in response to the Federal Reserve’s monetary policy.

US Dollar Index (TradingView)

• US100 (Nasdaq 100)

The US100 has fallen slightly further since the correction below 18,000 and now sits near 17850. This week, there are some key events related to the US interest rate decision, including a statement and press conference by the Federal Reserve. The market is likely to remain conservative, at least until the policy on US interest rates is announced.

US100 (TradingView)

• Gold Futures

The price of gold futures is down slightly to 2152 after hitting 2179. The decline is small compared to the steep rise in U.S. Treasury yields, suggesting that buyers are stronger than sellers and could push gold prices higher further.

Gold Futures (TradingView)

3. Bitcoin Market Data

• MVRV Z-score

The MVRV Z-score decreased slightly from 2.96 to 2.83 this week. After Bitcoin’s slight correction, the MVRV Z-score decreased to just under 3, which is a positive sign for more gains as overheating has been resolved. If the MVRV Z-score rises above 6, a long-term top is likely, so be cautious if the score is above 5.

• 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 spiked up significantly last week after hitting 1.061 and then dropped back down to 1.068. Looking at historical data, after aSOPR spiked above 1.17 and then dropped back down, there was a temporary correction, and we are seeing that same correction this time around, confirming that watching for spikes in aSOPR can help predict short-term corrections. Last week, the daily aSOPR indicator was above 1, but when looking at the hourly indicator, there was a temporary period where it dropped below 1. Therefore, if the aSOPR fails to stay above 1 this week, we should be mindful of a possible trend break.

• 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

Bitcoin’s aggregated exchange-traded open interest reached an all-time high of $18.06B last week, up from $16.22B. However, it is now correcting back down to $16.12B, which is still quite high. The exchange aggregated estimated futures leverage ratio temporarily rose above 0.21, but now remains at 0.201.

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 consistently shown an outflow dominance since the Bitcoin spot ETF became active. This is positive for Bitcoin’s price. However, if the outflows from the Bitcoin spot ETF turn into inflows and exchange holdings start to increase, it could be a sign of a downtrend and should be watched carefully.

Bitcoin: Exchange Net Position Change (Glassnode)

• Number of Whale Wallets

The number of whale wallets holding more than 10k Bitcoin is down slightly from last week, which could mean that some whales are taking profits at the current price point. However, the decrease is small enough to suggest that many whales are still holding Bitcoin.

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

5. Last Week’s Major News

• Demand for Bitcoin spot ETFs continues…back above $73K

The price of Bitcoin (BTC) has surpassed $73,000 as inflows into Bitcoin ETFs continue. According to BitMEX research, spot ETFs saw net inflows of 14,706 BTC, surpassing last month’s record of $673 million. This brings total inflows to over $4 billion since the spot ETF’s launch. “The intraday nature of the move is reminiscent of the behavior of large institutional traders,” said Alexander Kuptsikevich, senior analyst at FxPro. “Either way, the overall trend remains bullish,” he added. However, crypto investment service MatrixPort noted in a report that Bitcoin’s rally is losing momentum due to divergence, with the relative strength index falling.

• Bitcoin stalls as short-term holders take profits

The price of Bitcoin (BTC) fell over the weekend as short-term holders continued to take profits. According to CoinGlass, $71.31 million was liquidated in Bitcoin over the past 24+ hours, with short positions accounting for about 53% of the liquidation. The “Kimchi Premium,” an indicator of the difference between Bitcoin’s local Korean price and the global market price, is hovering around 9%, showing signs of overheating, especially in South Korea.

• Solana stands alone in meme coin popularity…tops $200

The popularity of the meme coin has pushed the price of Solana above $200. The market capitalization has also risen to $89.4 billion, surpassing BNB to become the fourth-largest cryptocurrency. One of the reasons why Solana is the only cryptocurrency to remain on the rise while other major cryptocurrencies are falling is due to the influence of Memecoin. Memecoins based on the Solana network have gained a lot of traction in the market and are seeing significant price spikes, most notably on Binance, which recently listed the Solana-based memecoin Book of Memes (BOME), which has seen a surge in trading volume.

6. Major economic events

• Major economic events last week

Most of the US macroeconomic data released last week, including the core consumer price index, confirmed that inflation in the US remains subdued. A significant decline in crude oil inventories, as well as jobless claims that missed forecasts, raised fears that prices in the U.S. could remain elevated for some time to come, depending on the strength of the economy. The market responded by pushing U.S. 10-year bond yields above 4.3%, which hurt asset markets.

Major Economic Events for the 2nd week of March 2024 (Investing.com)

This week’s major economic events

This week marks the release of the economic outlook and statement from the FOMC, which makes decisions on US interest rate policies. Following Chairman Powell’s comments in early March, the market had been expecting a rate cut as early as June, but with market data released last week indicating that inflation remains strong, the expectation of a rate cut has been pushed back to July or later. Therefore, any mention of a rate cut in the FED’s statement or press conference will be of interest.

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

Summary

Positive indicators: Exchange outflows and inflows, MVRV Z-score

Negative indicators: U.S. bond rates, U.S. dollar index

Overall Review: After Bitcoin’s price reached historic highs last week and showed signs of overheating, a correction occurred as expected. This is likely a healthy correction from a crypto perspective, as the big news of Bitcoin’s halving and the influx of new funds from Bitcoin spot ETFs is still in effect, and the increase in market interest rates has caused major assets such as gold prices and U.S. equities to decline as well. Based on past bull market patterns, short-term corrections have seen Bitcoin’s price drop about 20%, and the duration of negative weekly prices has not exceeded two to three weeks. Therefore, while we may see another week or two of weakness in crypto, if the decline extends, it could be an opportunity to buy more spot or increase futures positions.