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 June!

1. Bitcoin Chart/Ethereum Chart

Bitcoin experienced a decline of over 5%, dropping from $66,650 last week to $62,500 this week. Analysis of the chart indicates that the downward trend is accelerating, particularly after falling below the 25-day and 99-day moving average lines. According to Kiyoung Ju, CEO of CryptoQuant, the primary cause for this decline is the German government, which holds the fourth-largest Bitcoin reserves globally, selling a portion of its holdings. The key support level is $61,000, which previously saw a rebound last May. If this level is breached, Bitcoin could continue dropping to $56,000.

BTCUSDT Chart (Binance)

The Bitcoin spot exchange-traded fund (ETF) has been experiencing fund outflows since last week. Last Friday alone, a total of $105.96 million was withdrawn from Bitcoin ETFs, with Fidelity’s FBTC witnessing outflows of $45 million. This trend suggests that caution is necessary, as recent adjustments in Bitcoin prices are affecting ETF fund outflows, which in turn are negatively impacting Bitcoin prices.

Spot Bitcoin ETF flow (The block)

Ethereum also saw a significant drop, falling from $3,622 last week to $3,367 this week. Although there is increasing speculation that the U.S. Securities and Exchange Commission (SEC) will approve the launch of an Ethereum spot ETF, the market price has remained sluggish. Cointelegraph, a leading cryptocurrency publication, has analyzed that macroeconomic uncertainty is likely to weigh heavily on investor sentiment, hindering any price rise in the near term. Andrew Kang of Mechanism Capital noted that the demand following the launch of an Ethereum spot ETF is expected to be limited, potentially causing Ethereum’s price to fall between $2,400 and $3,000. However, some experts believe that on-chain indicators suggest a drop in Ethereum’s price, and others argue that the so-called ‘altcoin season’ may be approaching as the MVRV ratio rises.

ETHUSDT Chart (Binance)

Bitcoin dominance slightly increased from 55.13% last week to 55.40% this week. Despite Bitcoin’s price decline, major altcoins such as Ethereum experienced sharper falls, contributing to the rise in Bitcoin dominance. Bitcoin dominance is approaching its peak levels, observed around the last halving in April, and is likely to be capped at the previous peak of 57%.

Bitcoin dominance chart (CoinMarketCap)

2. Major Economic Indicators

• US Bond Yields

The US 10-year bond interest rate has slightly fluctuated, increasing from 4.242% last week to 4.250% this week. Despite poor performance in U.S. retail sales and unemployment claims, the purchasing managers’ index for the manufacturing and service sectors performed well, diminishing expectations for more declines in U.S. interest rates.

US10YPrice Government Bond Rate (TradingView)

• US Dollar Index

The US dollar index rose marginally from 105.569 last week to 105.740 this week. The ongoing weakness of the Japanese yen is a major factor in the dollar’s strength. On the 24th, Japan’s Minister of Finance, Masato Kanda, indicated potential intervention in the yen’s exchange rate if necessary, which slightly mitigated the yen’s weakness. However, this intervention is unlikely to reverse the yen’s overall downward trend. Should the Japanese government intervene in the exchange rate, the US dollar index is more likely to stabilize or decline rather than continue strengthening.

US Dollar Index (TradingView)

• US100 (Nasdaq 100)

The Nasdaq 100 index remained relatively unchanged, going from 19,600 last week to 19,700 this week. Despite large technology stocks dominating the index, it failed to sustain a cautious upward trend, reminiscent of the recent comparisons to the dot-com bubble.

Analysts from security firms suggest that the recent decline in Bitcoin prices may signal an impending large-scale correction in the U.S. stock market. The correlation between Bitcoin and the Nasdaq 100 index is at its highest level since 2020. On the 21st, investment magazine Market Insider cited a report from Stifel, noting, “The 10% drop in Bitcoin’s price can be interpreted as a warning signal to the U.S. stock market.” Consequently, there is heightened attention on whether Bitcoin’s decline will affect the Nasdaq market or if Bitcoin will follow Nasdaq’s upward momentum.

US100 (TradingView)

• Gold Futures

Gold futures prices have shown mixed movements, decreasing slightly from $2,327 per ounce last week to $2,323 per ounce this week. This fluctuation is attributed to the relative strength of the dollar and the stagnation in gold purchases by the Chinese central bank. According to Sino-Bin International Securities, the correlation coefficient between China’s gold purchases and international gold prices was 0.75 as of September 2023, indicating China’s significant influence on global gold prices. Amid China’s de-dollarization efforts, it is anticipated that the Chinese central bank will resume gold purchases. Therefore, gold futures prices are likely to remain weak or stable in the short term, with potential increases depending on China’s future actions.

Gold Futures (TradingView)

3. Bitcoin Market Data

• MVRV Z-score

The MVRV Z-score decreased from 2.22 last week to 1.99 this week, indicating that the overheating caused by the Bitcoin halving has subsided. It remains to be seen whether the MVRV Z-score will approach bearish levels close to 0 or maintain its current level and rebound into the overheated zone.

• 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)

Bitcoin: MVRV Z-Score (Glassnode)

• aSOPR

The adjusted SOPR (aSOPR) is at 1.002 this week, down from 1.008 last week. Notably, the daily aSOPR fell below 1 last week, failing to sustain the bullish market’s statistical value. This suggests the possibility of a transition from a bull market to a complete bear market.

• 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 $17.43 billion to $16.59 billion, while the estimated leverage ratio remained steady at 0.203. This suggests that funds are exiting the futures exchanges, though the leverage ratio has not changed. Given open interest exceeding $16 billion is close to the high point over the past year, further adjustments are possible.

Outstanding Open Interests by Exchanges (Glassnode)

Exchanges’ combined estimated leverage ratio (Glassnode)

4. On-chain data

• Exchange inflows and outflows

Bitcoin has continued to show net outflows from exchanges over the past month or longer. This trend suggests a potential increase in Bitcoin over-the-counter (OTC) transactions and a resurgence of institutional investors, even amidst outflows from Bitcoin spot ETFs.

Bitcoin: Exchange Net Position Change(Glassnode)

• Number of Whale Wallets

The number of whale wallets holding more than 10,000 Bitcoin has remained relatively stable since increasing last week. On an annual basis, the number of these large wallets is relatively low. If Bitcoin’s price begins to trend upward, we can expect additional purchases by whales.

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

5. Last Week’s Major News

• Long-Term Holders, Miners, and ETF Managers Sell Billions of Dollars in Bitcoin

Recently, long-term holders, early miners, and ETF managers have been selling billions of dollars worth of Bitcoin, raising concerns about the short-term stability of the cryptocurrency market. BeInCrypto reported on the 19th that over the past two weeks, long-term Bitcoin holders have sold $1.2 billion in Bitcoin.

• Analysts’ Predictions for Altcoin Season

While some analysts predict that the altcoin season may not happen until next year due to Bitcoin’s current market dominance, others believe it could be brought forward, led by Ethereum. Crypto analyst Miles Deutscher argued that the market is far from an altcoin bull run, noting that while Bitcoin is reaching record highs and memecoins are trending, altcoins are significantly underperforming. However, cryptocurrency investor Leia Heilfern highlighted several bullish factors for cryptocurrencies, including the approval of Bitcoin and Ethereum ETFs and celebrity endorsements, which could drive the market forward.

6. Major economic events

• Major economic events last week

Last week, data indicated that inflation in the U.S. was easing, with employment indicators such as retail sales figures and new unemployment claims falling below forecasts. However, investor optimism was dampened as the manufacturing and services Purchasing Managers’ Indices (PMIs) both exceeded expectations, contradicting hopes for a more substantial economic slowdown. Additionally, existing home sales surpassed forecasts, suggesting that the U.S. housing market remains robust.

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

This week’s major economic events

This week, the release of the U.S. quarterly GDP and Federal Reserve monetary policy reports will be closely watched. For investors to see the two or more interest rate cuts they desire this year, the U.S. GDP would need to fall below forecasts, prompting the Federal Reserve to issue a negative outlook on the U.S. macroeconomy.

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

Summary

Positive indicators: Exchange inflow and outflow

Negative indicators: US Dollar Index, aSOPR, Futures Estimated Leverage Ratio

Overall Review: Adjustments in virtual assets, including Bitcoin, are ongoing. Many investors are cautious about the potential peak of the U.S. stock market. Given the continued downward trend this week, maintaining a neutral position is advisable to prepare for further declines. If the open interest in Bitcoin futures falls below $14 billion, it may be an opportune time to consider purchasing.