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 second week of November!

1. Bitcoin Chart/Ethereum Chart

With Donald Trump securing re-election as the 47th U.S. President, financial markets, including virtual assets and U.S. stocks, have surged, reaching new record highs. Bitcoin, which was trading at about $69,000 last week, jumped over 10% to $81,300, breaking its previous all-time high. This rise has minimized the importance of past resistance levels, with much of the purchasing momentum reportedly coming from U.S. investors. Notably, the Coinbase premium, which measures Bitcoin’s price difference between Coinbase and other exchanges, reached a seven-month high, while Bitcoin spot ETFs saw a record-breaking daily inflow of $1.37 billion. Analysts believe this surge has created a strong support zone near $74,000, though volatility is expected to remain high.

BTCUSDT Chart (Binance)

Spot Bitcoin ETF flows (The block)

Ethereum has also performed exceptionally, moving from $2,468 to $3,186. Although Bitcoin and Solana initially dominated investor attention by breaking their all-time highs, Ethereum, which had been relatively overlooked, broke out from its lows and experienced a sharp upward trend. Ethereum spot ETFs are also seeing fund inflows, albeit at a smaller scale than Bitcoin’s. If Ethereum sustains this momentum, it may soon challenge its own all-time high.

ETHUSDT Chart (Binance)

Spot Ethereum ETF flows (The block)

Bitcoin’s market dominance has dipped slightly, dropping to 59.49% after last week’s 60.46%. This minor shift is interpreted as a potential signal that capital flows could soon target altcoins, following Bitcoin’s rally. This scenario, where Bitcoin leads the rally followed by altcoins, is seen as an ideal upward market pattern, indicating strong interest and optimism across the broader cryptocurrency landscape.

Bitcoin dominance chart (CoinMarketCap)

2. Major Economic Indicators

• US Bond Yields

The U.S. 10-year Treasury yield declined from 4.38% to 4.30% after the Fed’s recent decision to cut its policy rate by 0.25%. While this eased the yield’s rise, many investors maintain a cautious outlook due to sustained inflation concerns and perceptions of stable economic growth. The market’s next moves will likely hinge on any policy shifts the Federal Reserve might make under the new Trump administration, as the Fed could adjust its stance in response to any upcoming fiscal measures.

US10YPrice Government Bond Rate (TradingView)

• US Dollar Index

The dollar index saw a notable increase, moving from 103.775 to 105.064, influenced by expectations of a stronger dollar under President Trump. The unusual decoupling of Treasury yields and the dollar index, typically aligned, may be temporary. Analysts suggest that if market interest rates stabilize, the two indices could realign, signaling consistent sentiment between interest rate expectations and dollar strength.

US Dollar Index (TradingView)

• US100 (Nasdaq 100)

The tech-heavy Nasdaq (US100) rose sharply from 20,100 to 21,170, driven by the “Trump rally” that followed his electoral win. The market optimism is largely tied to expectations of potential tax cuts and regulatory easing, which could benefit American companies, especially in the tech sector. However, the durability of this rally will depend on inflationary trends and future rate policy decisions, which could influence investor sentiment.

US100 (TradingView)

• Gold Futures

Gold prices declined from $2,738 to $2,672, reflecting a movement of funds from safe assets like gold to riskier investments such as stocks and cryptocurrencies as post-election risk sentiment shifted. This trend suggests that gold may continue to show weakness as investors prioritize growth-oriented assets in the near term, provided inflation remains within a manageable range.

Gold Futures (TradingView)

3. Bitcoin Market Data

• MVRV Z-score

The MVRV Z-score climbed from 1.99 to 2.60, moving above the critical “overheating” threshold of 2. This suggests that Bitcoin’s price may have entered an overvalued territory, typically signaling potential price corrections. However, as Bitcoin is above its all-time high, close monitoring is essential to assess whether this trend will be sustained.

• 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 Adjusted Spent Output Profit Ratio (aSOPR) also rose, reaching 1.063. Above 1, this metric indicates that investors are selling their Bitcoin at a profit, suggesting sustained bullish sentiment.

• 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 reached a new high of $23.16 billion, up from $21.81 billion last week. While the estimated leverage ratio dipped slightly from 0.222 to 0.215, the elevated open interest implies heightened trading activity and possible volatility ahead. Although the dip in leverage ratio suggests that some speculative risk has decreased, the high open interest levels mean price swings are still a possibility.

Outstanding Open Interests by Exchanges (Glassnode)

Exchanges’ combined estimated leverage ratio (Glassnode)

4. On-chain data

• Exchange inflows and outflows

Bitcoin has experienced a net outflow from exchanges since Q3, with outflows continuing to rise. This trend of coins moving off exchanges typically signals a bullish outlook, as reduced availability on exchanges can support upward price momentum by limiting potential sales volume.

Bitcoin: Exchange Net Position Change (Glassnode)

• Number of Whale Wallets

The number of whale wallets (holding over 1,000 and 10,000 BTC) has been decreasing, which may reflect profit-taking or hedging against anticipated volatility. Historically, reductions in whale wallet holdings can indicate an impending market shift, so this trend warrants caution, particularly over the medium term.

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

Number of Bitcoin wallets holding 1K or more (Glassnode)

5. Last Week’s Major News

• Trump as U.S. President-Elect: What Are His Cryptocurrency Pledges

From the start of his campaign, Trump pledged to ease regulations on U.S. digital assets and blockchain technology companies. His primary promises include recognizing Bitcoin as a strategic reserve asset, supporting U.S.-based Bitcoin mining companies, opposing central bank digital currencies (CBDCs), and advocating for the right to self-custody. Additionally, recent activities by World Liberty Financial, with the Trump family’s involvement, highlight his strong commitment to DeFi and the broader cryptocurrency industry. Insiders within the cryptocurrency sector have voiced support for Trump, expressing optimism about escaping the regulatory pressures seen under the Biden administration.

• Bitcoin Surpasses $80,000, Driving 57% Surge in Google Searches.

Following Bitcoin’s (BTC) recent rise to $80,000, Google searches related to Bitcoin increased by 57% in just one day. On the 11th, Google Trends data indicated Bitcoin search activity reached 58 points, a notable increase from the previous day’s 37 points. This index, based on relative search volume, reflects heightened interest but does not represent absolute numbers.

• Ethereum Foundation’s Asset Disclosure: 99% of Virtual Assets Held in Ethereum

The Ethereum Foundation has revealed that the majority of its virtual assets are held in Ether (ETH). According to the 2024 Ethereum Foundation Report published on the 7th, as of October 31st, 81.3% of the Foundation’s total assets — amounting to $970.2 million — are in virtual assets, with the remaining 18.7% in non-virtual assets. Of these virtual assets, 99.45% (worth $788.7 million) are held in Ether, Ethereum’s native currency. The Foundation explained, “We hold the majority of our assets in ETH due to our confidence in Ethereum’s potential.” This ETH holding represents about 0.26% of the total supply.

6. Major economic events

Major economic events last week

The re-election of Donald Trump as the 47th President of the United States has sparked optimism in both the virtual assets and U.S. stock markets. The anticipation of deregulation and potentially business-friendly policies has created a “tailwind,” boosting investor confidence, especially in the technology sector, as seen with gains in indices like the Nasdaq 100. Bitcoin has also broken through previous resistance levels, reaching new all-time highs, partly due to increased inflows into Bitcoin spot ETFs, indicating growing institutional interest.

In terms of monetary policy, the U.S. Federal Reserve’s recent 0.25% rate cut was implemented to support market liquidity. However, Fed Chair Jerome Powell clarified that the election outcome will not directly impact the Fed’s approach, which remains data-dependent, especially in the face of persistent inflation concerns.

Major Economic Events for the 1st week of November 2024 (Investing.com)

This week’s major economic events

Key upcoming events include the Consumer Price Index (CPI) release and another address from Powell, both of which will provide insight into potential adjustments in U.S. interest rate policy amid Trump’s presidency.

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

Summary

• Positive: High inflows into Bitcoin spot ETFs, rising MVRV Z-score, sustained levels above 1 for aSOPR, and the strong Nasdaq 100 performance, suggesting overall momentum.

• Negative: A strengthening U.S. dollar index and weaker gold prices could signal a shift in risk preferences, while high open interest in Bitcoin futures could introduce volatility, suggesting that Bitcoin’s current rally might soon face resistance.

Market Outlook: The overall trajectory for virtual assets appears positive, with Bitcoin leading the cycle. However, given the historically high levels of open interest in Bitcoin futures, short-term volatility could increase. Portfolio diversification into altcoins might be beneficial, especially if capital starts flowing from Bitcoin to other virtual assets, potentially signaling a broader market rally.

As the market responds to Trump’s policies and inflationary pressures, monitoring these economic indicators and their impact on both traditional and virtual asset markets will be crucial for investors looking to navigate this period effectively.