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 August!

1. Bitcoin Chart/Ethereum Chart

Last week, Bitcoin’s price experienced a slight decline, dropping from $59,000 to $58,500. The chart reflects a continuation of the downward trend, marked by progressively lower highs.

On August 15, Grayscale’s GBTC saw inflows of $25 million among Bitcoin spot ETFs. Meanwhile, other spot ETFs, including Fidelity’s FBTC, recorded a total inflow of $36.1 million, with FBTC alone contributing $16.2 million. This resulted in a net inflow of $11.1 million across the market.

Bitcoin has yet to reverse its downward trend since peaking in May. On the 13th, 30,000 BTC, reportedly received from Mt. Gox to an address believed to be associated with BitGo, was transferred to a new address, heightening market anxiety. For Bitcoin to shift its current trend, the resolution of the Mt. Gox debt and the U.S. government’s holdings, or the announcement of a specific sale plan, would be beneficial.

BTCUSDT Chart (Binance)

Spot Bitcoin ETF flows (The block)

Ethereum also saw a decline last week, with its price falling from $2,700 to $2,600. As of August 15, Ethereum spot ETFs experienced a net outflow of $39.2 million. Additionally, Bitcoin transaction fees reached an all-time low last week. A trend reversal for Ethereum may be challenging until there is renewed network activity or a significant influx of spot funds. However, if the current downtrend reverses, strong buying pressure from spot ETFs could trigger a substantial rally.

ETHUSDT Chart (Binance)

Spot Ethereum ETF flows (The block)

Bitcoin dominance remained relatively stable, slipping slightly from 56.92% last week to 56.89% this week. This stability reflects the overall consolidation in the cryptocurrency market. In the medium to long term, the upward trend in Bitcoin dominance, which has persisted for over a year, is expected to continue. However, in the short term, it is unlikely that Bitcoin dominance will surpass the previous resistance level of 58%.

Bitcoin dominance chart (CoinMarketCap)

2. Major Economic Indicators

• US Bond Yields

Last week, the U.S. 10-year Treasury yield saw a slight decrease, moving from 3.909% to 3.892%. Although the yield briefly dipped into the low 3.8% range, it rebounded as new unemployment claims came in lower than expected, mitigating the overall decline.

US10YPrice Government Bond Rate (TradingView)

• US Dollar Index

The U.S. Dollar Index significantly declined, falling from 103.118 last week to 102.386 this week. This larger drop is primarily attributed to deteriorating U.S. housing data. In July, U.S. housing starts experienced their largest decline since the onset of the pandemic, signaling a notable deterioration in the housing market outlook.

US Dollar Index (TradingView)

• US100 (Nasdaq 100)

With the Bank of Japan announcing that no additional rate hikes are anticipated in the near term, the U.S. Dollar Index is likely to continue trending in line with the broader U.S. economic outlook.

The US100 index surged sharply from 18,500 to 19,500, driven largely by algorithmic trading and strategic buying of major technology stocks at lower prices. Nvidia, in particular, gained significant momentum, soaring to over 19% throughout the past week. Nvidia is expected to continue its rally ahead of its earnings announcement on August 28, as it is likely to report results that exceed market expectations.

US100 (TradingView)

• Gold Futures

Gold futures prices broke previous highs last week, rising from $2,455 per ounce to $2,498. This increase is due to the depreciation of the dollar and the surge in gold prices, as investors turned to gold as a short-term alternative to the dollar.

Bitcoin could also reach new highs, similar to gold, if concerns surrounding Mt. Gox’s debt repayment and the U.S. government’s potential sales are resolved.

Gold Futures (TradingView)

3. Bitcoin Market Data

• MVRV Z-score

The MVRV Z-Score slightly declined from 1.659 last week to 1.615 this week, indicating a lack of overheating in the market and reflecting a cautious stance among virtual asset participants.

• Indicator explanation: The MVRV Z-score measures the difference between Bitcoin’s market capitalization and its realized value, divided by the standard deviation. It serves as an indicator to assess whether Bitcoin’s market capitalization is overvalued or undervalued. A score below 0 suggests that Bitcoin is significantly undervalued, while a score of 6 or higher, as seen during the all-time high (ATH) in 2021, indicates an overheated market.

Bitcoin: MVRV Z Score (Glassnode)

• aSOPR

The aSOPR indicator remained relatively stable, moving marginally from 1.004 last week to 1.008 this week. However, the frequent instances of values below 1 over the past week suggest that the downward trend is persisting.

• SOPR, or Spent Output Profit Ratio, is calculated by dividing the price at which Bitcoin was previously received by the price at the time of transfer. A SOPR below 1 indicates a bearish market, while a value above 1 indicates a bullish market. The aSOPR is an adjusted version that excludes short-term transactions (within one hour), providing a more accurate representation.

Adjusted SOPR (Glassnode)

• Open Interest

Open interest in Bitcoin perpetual futures increased from $13.59 billion to $14.66 billion, with the estimated leverage ratio rising from 0.170 to 0.185. This could be interpreted as a gradual recovery in investment sentiment following the downturn on Black Monday two weeks ago. However, the current size of open interest remains significant relative to Bitcoin’s price, posing a risk of further declines.

Outstanding Open Interests by Exchanges (Glassnode)

Exchanges’ combined estimated leverage ratio (Glassnode)

4. On-chain data

• Exchange inflows and outflows

After seven consecutive weeks of increasing Bitcoin holdings on exchanges, last week saw a reversal as net outflows were recorded. If this net outflow trend continues, it may signal the approaching end of Bitcoin’s bear market.

Bitcoin: Exchange Net Position Change(Glassnode)

• Number of Whale Wallets

The number of whale wallets holding more than 10,000 BTC continues to decrease from already low levels, maintaining the current downward trend. If this decline is related to wallets associated with the U.S. government or Mt. Gox repayments, a significant event could be imminent, potentially increasing market volatility.

For Bitcoin to stage a rebound, a recovery in the number of whale wallets holding more than 10,000 BTC will be essential.

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

5. Last Week’s Major News

• Former BOJ board member: “Further interest rate hikes unlikely this Year”

The prospect of additional interest rate hikes by the Bank of Japan (BOJ) this year appears increasingly uncertain. Market volatility has risen following the recent rate hike, and the likelihood of a swift recovery in the Japanese economy remains low. In an interview with Bloomberg on August 9th, former BOJ board member Makoto Sakurai stated that “further rate hikes will be difficult for the remainder of this year.” He also expressed doubt about the possibility of another rate hike by March of next year, citing increased market instability following the BOJ’s decision to raise rates on July 31st. This uncertainty is heightening concerns among market participants regarding the BOJ’s approach.

• Ethereum gas fees at a five-year low, raising concerns about network stability

YooToday has reported growing concerns over Ethereum’s network stability as gas fees have dropped to a five-year low of 0.8 gwei. Gas fees, which are necessary for processing transactions on the network, also serve as a defense against spam attacks. According to Dune Analytics, Ethereum gas fees fell below 2 gwei for the first time in five years on August 10th, and even dipped below 1 gwei at one point during the same day.

• Bitcoin miners signal a bottom as hashrate hits All-Time High

Bitcoin’s hashrate reached an all-time high this week, indicating that miners are once again expanding their mining capacity, which may suggest a bottom for Bitcoin prices, according to a report by CoinDesk on August 14th. Data from CryptoQuant, a cryptocurrency on-chain analytics firm, shows that the Bitcoin network’s hashrate set a new record of 627 exahashes per second last Tuesday. This resurgence in hashrate follows an 8.5% decline in early July. The increase comes despite the recent drop in Bitcoin prices and demonstrates renewed optimism among miners after several months of selloffs. Hashrate reflects the average income generated per unit of mining power.

6. Major economic events

Major economic events last week

Recession fears have intensified as inflation has decreased and crude oil inventories have risen. However, the market has stabilized due to the emergence of Sham’s Law, coupled with initial jobless claims falling below expectations, indicating continued strength in the labor market. This stabilization has particularly benefited major U.S. technology stocks and gold futures, which have shown strong gains.

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

This week’s major economic events

The most significant event this week is the Jackson Hole meeting. Federal Reserve Chairman Jerome Powell is set to deliver the keynote address at the Fed’s annual economic symposium in Jackson Hole, Wyoming, on Friday, the 23rd, at 10 a.m. ET. The market will closely watch Powell’s remarks for clues about the pace and timing of potential rate cuts.

Earlier this month, growth fears triggered a sharp selloff, but recent positive economic data has alleviated concerns about a recession, boosting U.S. stocks on hopes of a soft landing. Most market participants now expect the Fed to cut rates at the upcoming September FOMC meeting, with the primary debate centered on whether the cut will be 0.25% or 0.5%.

The Fed is scheduled to release the July FOMC minutes on Wednesday. Last month, Chairman Powell acknowledged progress in reducing inflation and left the door open for a potential rate cut in September. The minutes are expected to offer additional insights. Also on Wednesday, the Bureau of Labor Statistics will release its preliminary revised baseline for the March 2024 nonfarm payrolls level. The weekly initial jobless claims report is due on Thursday.

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

Summary

Positive Indicators: U.S. Dollar Index, gold futures, exchange inflows and outflows Negative Indicators: aSOPR, whale wallets

Overall Review: Bitcoin underperformed last week as major assets like U.S. stocks and gold futures rose and the Dollar Index declined. This underperformance is largely due to investor concerns over potential Bitcoin sales by Mt. Gox and the U.S. government. As these sell events become more imminent, it is crucial to monitor Bitcoin movements in these key wallets. Bitcoin prices are likely to resume their rally following the current correction.