The Weekly Report summarizes 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 April!

1. Bitcoin Chart/Ethereum Chart

Last week, Bitcoin witnessed a significant drop following Iran’s airstrike on Israel, which was then followed by a modest recovery. From last Monday’s $69,000, Bitcoin briefly dipped below $61,000 on Binance on the 13th before bouncing back and surpassing $65,000.

The market is now grappling with heightened uncertainty stemming from the ongoing conflict in the Middle East. Escalating oil prices, a consequence of the conflict, elevates inflation risks which adds negative macroeconomic pressures. Until these uncertainties subside, a market characterized by high volatility is anticipated, with traditional safe havens like gold, the US dollar, or the Japanese yen likely to garner favor.

However, from a crypto standpoint, this scenario presents an opportunity to acquire more Bitcoin ahead of the halving event. Historically, Bitcoin’s price tends to peak about 18 months post-halving, but with the advent of Bitcoin spot ETFs, there’s speculation that this cycle’s ascent may accelerate. Nonetheless, the Iran-Israel conflict prompted a shift from inflows to outflows in Bitcoin spot ETFs, weakening Bitcoin’s price. Viewing the long-term cycle, a decline (a 17.7% drop from the peak) ensued, seen as a healthy correction within an upward trajectory post-halving. While there’s a risk of further decline, akin to the adjustment of roughly 30% observed before and after previous halving events, the magnitude of the downturn is expected to be limited.

BTCUSDT Chart (Binance)

Similar to Bitcoin, Ethereum experienced a notable price decline followed by a temporary recovery. While Ethereum’s drop was more pronounced compared to Bitcoin, its fluctuation was relatively subdued compared to other altcoins, attributed to reports of the potential approval of an Ethereum spot ETF in Hong Kong. Additionally, Ethereum’s transition from inflation to deflation in issuance last week helped mitigate the decline in its price. Despite the unlikely immediate approval of the Ethereum spot ETF by the US SEC in May, positive news surrounding ETF approval is anticipated to persist into the latter half of the year. Furthermore, with a substantial outflow of Ethereum from Matrixport-related wallets outside the exchange (Binance) recently, there’s a possibility of Ethereum demonstrating strong short-term performance.

ETHUSDT Chart (Binance)

Bitcoin dominance briefly surged from 54.41% last week to 57%, now resting at 55.78%. Concerns over more conflict in the Middle East, amid Iran-Israel tensions, prompted investors to flee the market in large numbers, particularly impacting other altcoins more than Bitcoin, considered a relatively secure asset. With the Bitcoin halving event scheduled for the 20th, Bitcoin dominance is anticipated to maintain its strength for the foreseeable future.

Bitcoin dominance chart (CoinMarketCap)

2. Major Economic Indicators

• US Bond Yields

US bond yields continued their upward trajectory, rising from 4.418% last week to 4.538% this week. March saw a significant surge in bond interest rates, fueled by the increase rate of the American Consumer Price Index surpassing expectations. Additionally, the looming threat of rising oil prices due to the Iran-Israel conflict was anticipated to exert downward pressure on inflation, further propelling bond interest rates. However, as investors favored safe assets amidst war risks, bond prices climbed, causing the bond interest rate, hovering at 4.6%, to retreat to the mid-4.5% range. While the potential escalation of the Iran-Israel conflict remains uncertain, many experts believe it’s unlikely to escalate into a large-scale conflict ahead of the US presidential election. Consequently, the delay in the US Federal Reserve’s interest rate cut is expected to have a stronger impact on US bond yields compared to geopolitical tensions.

US10YPrice Government Bond Rate (TradingView)

• US Dollar Index

The US dollar index sustained its robust dollar momentum, reaching 105.937. This mirrors the position from last November when discussions about lowering U.S. Treasury interest rates gained traction. Given the global geopolitical instability, the prevailing consensus suggests the continued strength of the dollar in the foreseeable future.

US Dollar Index (TradingView)

• US100 (Nasdaq 100)

The US100 index dipped from 18,100 last week to 18,000 this week. Despite the ongoing Middle East conflict, the index’s relatively stable performance reflects optimistic expectations regarding the first-quarter performance of American companies. However, until the visibility of a US Federal Reserve interest rate cut materializes, the Nasdaq 100 index is likely to exhibit weakness or remain flat rather than exhibit strength.

US100 (TradingView)

• Gold Futures

Gold futures briefly surged past $2,400, marking a historic high, before experiencing a slight downturn and hovering around $2,360. The economic slowdown in China prompted central banks and individual investors in China to ramp up their gold investments. Moreover, heightened demand for safe assets, fueled by the Middle East conflict last week, propelled gold futures to record highs. While gold prices may remain buoyant due to the ongoing preference for safe assets, the persistently high base interest rate in the United States could hinder further rallies. Consequently, the sustained rally in gold, a traditional safe-haven asset during periods of low-interest rates, may be unlikely without an interest rate cut.

Gold Futures (TradingView)

3. Bitcoin Market Data

• MVRV Z-score

The MVRV Z-score declined from 2.72 to 2.44 this week, suggesting a correction in the ongoing bull market following last year’s score peaking at 3. Given the halving cycle and the MVRV Z-score level, it seems premature to conclude that the market has reached the pinnacle of the bull cycle.

• 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

aSOPR dropped from 1.023 to 1.000, notably dipping below 1 to 0.9919 as of the 13th, signaling a departure from the typical figure indicative of a bull market. At this stage, consistent aSOPR readings below 1 imply a potential shift to a short-term bear market, underscoring the importance of maintaining the figure above 1 as Bitcoin’s price rebounds.

• 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 combined perpetual futures open interest on exchanges decreased from $16.49B last week to $14.41B this week. Despite this decline, open interest remains notably high when compared with the past year’s trends, suggesting the possibility of increased fallout through liquidation, should Bitcoin experience further decline.

Outstanding Open Interests by Exchanges (Glassnode)

Exchanges’ combined estimated leverage ratio (Glassnode)

4. On-chain data

• Exchange inflows and outflows

Bitcoin positions on exchanges continue to favor outflows, with holdings remaining historically low. A surplus of Bitcoin within exchanges could exert downward pressure on prices through direct market selling, thus the sustained outflow of Bitcoin from exchanges is viewed positively for price stability.

Bitcoin: Exchange Net Position Change (Glassnode)

• Number of Whale Wallets

The number of whale wallets holding more than 10k Bitcoin saw a temporary rebound last week before falling again and eventually stabilizing. A rise in the number of whale wallets at current prices could signal an impending price increase post-halving.

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

5. Last Week’s Major News

• Amidst the haze of the global financial market, concerns loom over the potential of a ‘vicious cycle of retaliation’ in the Iran-Israel conflict

With Iran launching its first-ever direct attack on Israeli territory, all eyes are on whether this airstrike will ignite further escalation. This crisis unfolds against a backdrop of investor unease, already heightened by fears of prolonged high interest rates amidst entrenched inflationary pressures. As a result, the market is bracing for heightened volatility in the coming weeks.

• Bitcoin’s descent below $65K and a significant drop in altcoins as unfavorable macroeconomic and geopolitical factors converge

Market capitalization dipped by 5.69% to $2.29 trillion on the 14th, with trading volume decreasing by 6.44% to $109.7 billion. While Bitcoin witnessed a 2.89% decline and hit $64,880.14, altcoins suffered more substantial losses, driving Bitcoin dominance to its highest level in three years. The pronounced decline in altcoins is attributed to macroeconomic indicators and concerns surrounding the Middle East conflict, prompting a flight to safety from risky assets.

• Bitcoin ETF converts net outflows to $55.1 million — GBTC outflows expand to $166.2 million

Eleven Bitcoin spot ETFs listed on the U.S. stock market experienced net outflows, with data from BitMEX Research indicating an overall negative flow of $55.1 million on Friday. Notably, Grayscale Bitcoin Trust (GBTC) net outflows surged to $166.2 million. In contrast, there was a net inflow of $111.1 million into the BlackRock Bitcoin ETF (IBIT). The past week witnessed net outflows totaling $82.6 million, with notable outflows on Monday, Wednesday, and Friday, and significant inflows on Wednesday and Thursday.

6. Major economic events

• Major economic events last week

Last week, the US core consumer price index for March surged by 0.4%, surpassing the forecasted 0.3% increase, thereby influencing the uptick in US bond yields. Simultaneously, as Iran initiated retaliatory attacks on Israel last Friday, the situation in the Middle East became increasingly volatile, fostering uncertainty surrounding oil prices despite the recent stabilization from expanded crude oil inventories.

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

This week’s major economic events

This week, all eyes are on Chairman Powell’s speech scheduled for the 17th, amidst escalating tensions in the Middle East. With market uncertainty heightened by the geopolitical landscape, investors eagerly await any indications from Chairman Powell regarding a potential interest rate cut. Alongside previously planned major economic events, the intensifying conflict between Iran and Israel emerges as a pivotal variable for the market, warranting close monitoring of any developments in the Middle East.

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

Summary

Positive indicators: gold futures, the perpetual futures estimated leverage ratio, as well as exchange inflows and outflows

Negative indicators: the Middle East conflict between Iran and Israel, US bond yields, the US dollar index, and aSOPR.

Overall Review: Last week witnessed adverse impacts on the virtual asset market stemming from the Middle East conflict, alongside rises in US bond yields and the dollar index. Additionally, aSOPR briefly dipped below 1, which could suggest that we are not in a bull market right now. Nevertheless, considering Bitcoin’s ongoing upward cycle, any further decline is expected to be capped at 30% from the peak. While volatility may escalate surrounding the Bitcoin halving scheduled for this Friday, long-term prospects point to a continuation of the upward cycle post-halving.