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 April!

1. Bitcoin Chart/Ethereum Chart

Last Wednesday, Bitcoin’s price dipped below $60,000, but rebounded around the halving, currently standing at $65,900. Last week’s decline can be attributed to the delay in the anticipated U.S. Federal Reserve’s base interest rate cut, originally expected in June, and geopolitical tensions stemming from the Middle East. Additionally, the extended period of higher-than-expected interest rates has slowed capital inflow into the Bitcoin spot exchange-traded fund (ETF), which commenced trading in January, contributing to Bitcoin’s weakness.

It’s worth noting that Bitcoin has recently exhibited a trend of decoupling from major assets like the U.S. stock market or gold prices. The $59,000 mark, which acted as a support level for two rebounds since March, is anticipated to become the primary support level. Whether it surpasses the previous high of $73,700 will mark the beginning of an upward trend. This week, we’re likely to witness limited movement between resistance and support levels rather than a significant rally past the previous high.

BTCUSDT Chart (Binance)

Ethereum’s price mirrored Bitcoin’s movements, though with a larger decline, dropping nearly 30% from $4,093 to about $2,850 on Binance in March before recovering slightly. The 25-day moving average indicates a downward trend, suggesting the possibility of more decline. However, with worries about the Bitcoin halving behind us and Ethereum undergoing a more substantial correction than Bitcoin, it could experience significant growth upon recovery. Particularly, if Ethereum continues its deflationary trend where the amount burned exceeds the issuance, it’s expected to potentially surpass its previous high this year, akin to Bitcoin.

ETHUSDT Chart (Binance)

Bitcoin dominance saw a slight decrease from 55.78% last week to 55.04% this week. This change was less significant compared to last week’s Bitcoin halving. Bitcoin dominance, which fluctuated between 51% and 55% before the halving, might stabilize within a higher range post-halving, fluctuating between 53% and 57%. As the halving has concluded, the volatility of Bitcoin dominance is expected to decrease compared to pre-halving levels.

Bitcoin dominance chart (CoinMarketCap)

2. Major Economic Indicators

• US Bond Yields

The US 10-year bond yield climbed from 4.538% last week to 4.648% this week, largely propelled by the US Federal Reserve’s hawkish stance. At a meeting in Washington on the 16th, Federal Reserve Chairman Jerome Powell tempered expectations for an interest rate cut, stating that it would likely take longer than expected to get inflation down to 2%. The anticipation shifted from three to two interest rate cuts this year due to high inflation in the United States, causing a notable downturn across various asset markets, including virtual assets, amid concerns of prolonged high interest rates.

US10YPrice Government Bond Rate (TradingView)

• US Dollar Index

The US dollar index continued its robust performance, reaching 106.242 this week from 105.937 last week. With elevated US bond yields and instability in the Middle East, the persistence of a strong dollar seems probable for the short term.

US Dollar Index (TradingView)

• US100 (Nasdaq 100)

The US100 index experienced a significant decline from last week’s 18,000, now resting at 17,100. A surge in US Treasury yields exerted pressure on the stock market, compounded by sharp drops in major technology stocks like Tesla and Micron. However, the primary factor remains the potential for a US interest rate cut. Until there is serious discourse regarding a cut, it’s unlikely we’ll see an upturn surpassing previous highs.

US100 (TradingView)

• Gold Futures

Gold futures briefly surpassed $2,400 but retreated alongside the uptick in US bond yields, currently standing at $2,345. Gold, being a non-interest-bearing asset, typically gains favor during periods of low interest rates. Unless there’s additional short-term demand stemming from the preference for safe assets amidst the economic downturn in China and the crisis in the Middle East, there’s a chance that interest rates may weaken in the short term within the current high-interest rate environment.

Gold Futures (TradingView)

3. Bitcoin Market Data

• MVRV Z-score

The MVRV Z-score saw a slight decrease from 2.44 last week to 2.37 this week. This fluctuation, seen from a long-term perspective, suggests a decline that could occur amidst a bull market, indicating that the peak of the upward cycle due to the halving may not have been reached yet.

• 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 experienced a slight uptick from 1.000 last week to 1.015 this week. However, on the 17th, the aSOPR dipped below 1, registering at 0.9979, casting uncertainty on the continuation of the bull market. Nonetheless, the swift return of aSOPR above 1 suggests that the bull market remains intact.

• aSOPR is short for Adjusted 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 exchange-summed perpetual futures open interest slightly decreased from $14.41B last week to $14.22B this week. Additionally, the combined estimated futures leverage ratio dipped slightly from 0.181 last week to 0.180 this week. These adjustments indicate a moderation in overheating. With the substantial liquidation of open interest over the past two weeks, the likelihood of a significant downturn from current levels is relatively low. While recent fluctuations are influenced by macroeconomic and international factors, the potential for further decline exists. However, considering the open interest and leverage ratio, any additional downturn is likely to transition into an upward trend.

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 demonstrate an outflow advantage, which bodes well for Bitcoin’s ascent. Nevertheless, the inflow of funds into Bitcoin spot ETFs has slowed. If further fund inflows into spot ETFs coincide with a decrease in Bitcoin holdings on exchanges, a supply shortage may spur an increase.

Bitcoin: Exchange Net Position Change(Glassnode)

• Number of Whale Wallets

There hasn’t been a significant change in the number of whale wallets that hold more than 10k Bitcoin. The neutral stance of these whales, maintaining their Bitcoin positions at the current price level, suggests a cautious outlook.

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

5. Last Week’s Major News

• Powell: “longer than expected” for inflation to reach Fed’s 2% target” to be sure of 2% inflation”… Interest rate cut delayed

On the 16th, Jerome Powell, Chairman of the Federal Reserve System (Fed), the U.S. central bank, stated that it is expected to take longer than previously anticipated to attain the confidence needed to lower inflation down to the central bank’s 2% target. This shift in stance suggests a move towards a more hawkish position, favoring monetary tightening, as the U.S. economy continues to experience robust growth, with price indicators consistently surpassing expectations over the past three months.

• Mt. Gox, Bitcoin 142K payment plan… possibility of mass selling

Concerns have arisen regarding potential significant selling pressure as Mt. Gox’s bankruptcy administrator initiates payments to creditors in Bitcoin (BTC). BeInCrypto reported on the 21st that the distribution plan encompasses 142,000 BTC, 143,000 Bitcoin Cash (BCH), and 69 billion yen (approximately 445,621,320 USD). While worries about price declines, due to Mt. Gox’s sell-off, have garnered market attention, there have been no instances of actual impact thus far. BeInCrypto noted that several creditors active on Reddit’s Mt. Gox Bankruptcy hub confirmed receipt of the distribution update. Responses among creditors vary, with some remaining skeptical while others anticipate an earlier-than-expected commencement of distribution. There’s also a possibility that distribution will conclude before October 31, 2024.

• Bitcoin 4th halving applies… Price fluctuations are still minimal

Bitcoin’s 4th halving was implemented around 9 a.m. on the 20th, which entails a halving of Bitcoin mining rewards. With Bitcoin’s issuance capped at 21 million, mining rewards halve approximately every four years. Following this halving, Bitcoin mining rewards decreased from 6.25 BTC to 3.125 BTC per block. Consequently, the new supply of BTC is anticipated to decrease, potentially leading to a rise in BTC price in line with supply and demand dynamics. Historically, all three previous halvings resulted in long-term BTC gains.

6. Major economic events

• Major economic events last week

On the 16th, Chairman Powell’s hawkish comments during his speech triggered a significant downturn in the overall asset market. However, the increase in announced crude oil inventories helped alleviate concerns about price fluctuations in crude oil due to instability in the Middle East. Conversely, new jobless claims fell below expectations, indicating continued strength in U.S. employment.

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

This week’s major economic events

Key events to monitor this week include the release of the US first quarter GDP and the core consumer spending price index for March. The anticipation of a potential US interest rate cut and a subsequent upward trend in the asset market hinges on signs of stabilization in US prices. Particularly, virtual assets, undergoing Bitcoin’s halving cycle, are poised for significant growth compared to other assets.

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

Summary

Positive indicators: Exchange inflows, exchange combined perpetual futures open interest, and estimated leverage ratio

Negative indicators: US bond yields, US dollar index, US100

Overall Review: The virtual asset market, including Bitcoin, experienced a significant shock from the hawkish remarks of the U.S. Federal Reserve last week. However, with Bitcoin successfully making it through the halving cycle, the overall virtual asset market has rebounded and is exhibiting favorable trends compared to other major assets like the US stock market. While short-term risks persist due to US interest rates and geopolitical tensions in the Middle East, the removal of these uncertainties could pave the way for a return to an upward trend in virtual assets. Therefore, instead of banking on a decline in virtual assets, it would be prudent to maintain positions and monitor for signs of a shift toward an upward trend.