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 September!

1. Bitcoin Chart/Ethereum Chart

Bitcoin prices have seen a significant increase, rising from $59,100 last week to $63,700 this week. Anticipation of a 0.5% interest rate cut by the U.S. Federal Reserve has slowed outflows from Bitcoin spot ETFs, leading to greater inflows into funds like Ark Investment and Fidelity. According to CoinDesk, BlackRock’s Bitcoin spot ETF is still awaiting approval from the OCC and CFTC, which is expected to attract institutional investors to the cryptocurrency market.

Bitcoin is approaching a key resistance level at $64,000. If it breaks through, the price could surge to $70,000. Conversely, if it retreats, a support level is expected to form at $58,000. Holding this support would suggest a continued upward trend through the fourth quarter. In the medium- to long-term outlook, Bitcoin has rebounded from a low of $49,000, breaking the previous downtrend.

BTCUSDT Chart (Binance)

Spot Bitcoin ETF flows (The block)

Ethereum also experienced a rebound, rising from $2,300 last week to $2,600 this week. The supply of Ethereum has steadily increased to 120.35 million, while net outflows from Ethereum spot ETFs have slowed. Ethereum has been recovering following a downward trend after the network upgrade in April. If spot ETF inflows strengthen, this rebound could gain further momentum.

ETHUSDT Chart (Binance)

Spot Ethereum ETF flows (The block)

Ethereum Supply(y-chart)

Bitcoin dominance slightly decreased from 58.01% to 57.87% last week, although it briefly broke through the 58% resistance. The sustained dominance, coupled with Bitcoin’s price increase, indicates buying interest in other virtual assets, including altcoins, which is seen as a positive signal for the broader market.

Bitcoin dominance chart (CoinMarketCap)

2. Major Economic Indicators

• US Bond Yields

Last week, the U.S. 10-year Treasury yield rose slightly, from 3.648% to 3.741%. This temporary rebound in yields, which had previously declined following the major interest rate cut, was driven by stronger-than-expected employment data, such as lower unemployment benefit claims, sparking renewed inflation concerns. However, this is unlikely to significantly alter the broader trend of interest rate cuts. According to Fed Watch, there is a 57.4% probability of a 0.25% rate cut and a 42.6% probability of a 0.5% cut, suggesting that the Federal Reserve may move quickly with further reductions. This could have a positive effect on the virtual asset market, which relies heavily on liquidity.

US10YPrice Government Bond Rate (TradingView)

Fed Rate Monitor(Investing.com)

• US Dollar Index

The U.S. dollar index decreased slightly, from 101.035 last week to 100.816 this week. With the Federal Reserve expected to lower interest rates, Japan’s monetary policy has become the most significant variable. If Japan raises interest rates, the dollar index could experience considerable fluctuations, potentially increasing volatility in U.S. stock markets as well, warranting caution.

US Dollar Index (TradingView)

• US100 (Nasdaq 100)

The US100 index rose from 19,500 to 19,900 this week, largely driven by a rebound in memory semiconductor stocks like Tesla, Intel, and Micron, which had been in decline. However, AI-related stocks are showing mixed performance due to concerns of a potential economic slowdown and the pressures of over-investment.

US100 (TradingView)

• Gold Futures

Gold futures also rose, climbing from $2,577 to $2,620, setting a new all-time high. With U.S. interest rates continuing to fall, gold prices are expected to maintain their upward momentum through the end of the year. Bitcoin, which had been decoupled from gold for a time, now appears poised for further growth as it reconnects with the gold market, a development seen as a positive signal for the cryptocurrency.

Gold Futures (TradingView)

3. Bitcoin Market Data

• MVRV Z-score

The MVRV Z-Score rose from 1.548 last week to 1.844 this week. If this exceeds 2, which is typically seen as an indication of market overheating, careful monitoring will be required to assess whether reaching the previous high is feasible.

• 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 also increased slightly, from 1.003 to 1.011. With the weekly indicator consistently above 1, this signals a positive trend, suggesting that the market has entered an upward phase.

• 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

Bitcoin perpetual futures open interest grew from $15.16 billion last week to $16.83 billion this week. The estimated leverage ratio for perpetual futures similarly increased, moving from 0.193 to 0.197. With both open interest and leverage ratios on the rise, the market appears to be assuming more risk.

Although the current levels — $18 billion in open interest and a leverage ratio of 0.210 — are associated with previous market corrections, the present figures are not yet at a critical level. However, any market adjustment could lead to increased liquidation activity, so caution is warranted.

Outstanding Open Interests by Exchanges (Glassnode)

Exchanges’ combined estimated leverage ratio (Glassnode)

4. On-chain data

• Exchange inflows and outflows

The amount of Bitcoin held by exchanges continues to decline, with a significant outflow of $728 million two weeks ago serving as the catalyst for the recent market rebound. Given that this trend of outflows from exchanges persists, the positive momentum in the market is expected to continue.

Bitcoin: Exchange Net Position Change (Glassnode)

• Number of Whale Wallets

Additionally, the number of whale wallets holding more than 10,000 BTC is rebounding after hitting a yearly low, which is another encouraging sign. If this number slightly increases and surpasses 105, the market could be poised to challenge its all-time high.

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

5. Last Week’s Major News

• Fed Begins Rate Cut Cycle Amid Diverging Views Among Investment Banks on Further Reductions

The U.S. Federal Reserve (Fed) has initiated a rate cut cycle, lowering the benchmark interest rate for the first time in four and a half years, since March 2020. However, overseas investment banks (IBs) are divided on whether additional “baby cuts” (0.25% point reductions) or “big cuts” (0.5% point reductions) will occur this year, depending on their interpretations of economic growth and labor market conditions. On the 18th of this month, the Federal Open Market Committee (FOMC) voted to reduce the interest rate by 0.5 percentage points, bringing it down from the previous range of 5.25–5.5% to 4.75–5.0%. The decision passed with 11 votes in favor and 1 against, with hawkish Fed Governor Michelle Bowman advocating for a smaller 0.25% cut.

• BNB Price Set to Surge Following Binance Founder’s Release

The price of BNB, the native cryptocurrency of Binance — the world’s largest crypto exchange — could see a sharp rise following the anticipated release of its founder, Changpeng Zhao (CZ), on September 29, 2024. Binance has faced significant volatility since late 2023 due to legal challenges in the U.S. However, according to reports from Pinbold, Zhao’s imminent release is expected to act as a key catalyst for a price surge in BNB. Zhao’s popularity and influence within the cryptocurrency community, combined with the impact of his legal situation on the token’s performance, make his release a potentially pivotal moment for the market.

• Arab Nations Condemn Israeli Airstrike on Lebanon; Iraq Calls for Emergency Meeting

Arab nations have strongly condemned Israel’s largest airstrike on Lebanon since 2006. The Saudi Arabian government, through its official social media platform X (formerly Twitter), expressed deep concern over the escalating violence and warned of the serious consequences for regional security and stability. The Turkish Foreign Ministry also issued a statement, denouncing the attack as part of “a new phase in efforts to destabilize the entire region.” According to reports from the Washington Post on the 23rd, Iraq has called for an emergency meeting of Arab nations to discuss the situation.

6. Major economic events

Major economic events last week

Last week, the U.S. Federal Reserve (Fed) implemented a “big cut”, reducing the benchmark interest rate by 0.5 percentage points in a preemptive effort to address the economic slowdown. This decision was driven by the assessment that the labor market was cooling more rapidly than anticipated. While the market initially displayed mixed sentiments, it ultimately showed a positive trend, as the increased liquidity resulting from the interest rate cut outweighed concerns about a potential economic downturn.

However, opinions on the rate cut remain divided among experts. Chris Arullia, Head of Institutional Trading at Bybit, cautioned that “the Fed’s interest rate cut may provide short-term stimulus for the cryptocurrency market, but we must remain vigilant in light of growing economic uncertainty and market volatility.” He emphasized the importance of monitoring the heightened volatility in the cryptocurrency market resulting from the rate cut.

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

This week’s major economic events

A key economic event to watch this week is Chairman Powell’s speech scheduled for the 26th, following the announcement of new unemployment benefit claims. It is anticipated that Chairman Powell’s remarks regarding interest rate cuts and the economic outlook will significantly influence the asset markets.

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

Summary

Positive Indicators:

• Inflows into Bitcoin spot ETFs

• Bitcoin dominance

• Rising gold futures prices

• aSOPR

• Exchange inflows and outflows

• Number of whale wallets

Negative Indicators:

• Open interest in Bitcoin perpetual futures

• Estimated leverage ratio

Overall Review: Following the Fed’s interest rate cut, the downward trend in the virtual asset market has fully reversed, shifting to an upward trajectory. Although risk factors have increased — evidenced by the rising open interest in Bitcoin perpetual futures and a higher estimated leverage ratio — the likelihood of continued upward movement is strong, given the positive performance of other indicators. A prudent strategy may involve purchasing Bitcoin to ride the trend or investing in solid altcoins that have recently undergone significant adjustments.