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 December!

1. Bitcoin Chart/Ethereum Chart

Bitcoin surged past $100,000 milestone last week, reaching a high of $104,088 before increased volatility drove prices down to $91,000. It has since recovered to trade at $99,600 as of December 5. The market witnessed significant liquidations, with over $1.1 billion in long positions being cleared — the largest in 18 months.

Despite the sharp corrections, Bitcoin’s upward trend remains intact. If Bitcoin successfully consolidates above $100,000, the rally could extend further. Conversely, failure to maintain upward momentum might result in a retest of the $91,000 support level. Notably, renewed inflows into Bitcoin spot ETFs indicate sustained institutional interest, reinforcing the bullish narrative.

BTCUSDT Chart (Binance)

Spot Bitcoin ETF flows (The block)

Ethereum demonstrated a stronger performance compared to Bitcoin, rising from $3,712 to $4,087 over the week. Optimism surrounds Ethereum’s potential to reach an all-time high of $4,800, as suggested by Ryan Adams from Bankless. Persistent inflows into Ethereum spot ETFs further bolster this positive outlook, suggesting continued strength in the near term.

ETHUSDT Chart (Binance)

Spot Ethereum ETF flows (The block)

Bitcoin dominance fell from 56.65% to 55.40%, highlighting the relative outperformance of altcoins. Should Bitcoin reclaim the $100,000 mark, liquidity could shift back to Bitcoin, potentially leading to a rebound in dominance around the 55% level.

Bitcoin dominance chart (CoinMarketCap)

2. Major Economic Indicators

• US Bond Yields

Declined from 4.21% to 4.14%, driven by higher-than-expected unemployment claims despite persistent inflation concerns raised by the Federal Reserve Chair.

US10YPrice Government Bond Rate (TradingView)

• US Dollar Index

Remained steady, moving from 106.278 to 106.045. The relatively muted reaction to falling yields reflects limited market disruption.

US Dollar Index (TradingView)

• US100 (Nasdaq 100)

Climbed to a new record high of 21,607 from 20,892, marking it as the year’s strongest-performing major index. Although the rally may continue, heightened caution is warranted given signs of overheating and increased volatility.

US100 (TradingView)

• Gold Futures

Remained stable, slightly rising from $2,623 to $2,644 per ounce. The decline in yields suggests a potential upside for gold prices, although further movements will depend on shifts in the dollar index and interest rate trends.

Gold Futures (TradingView)

3. Bitcoin Market Data

• MVRV Z-score

The MVRV Z-Score has increased slightly from 3.24 last week to 3.35 this week, indicating a continued uptrend but at a slower pace. This level, comparable to the market conditions during the April correction, suggests caution. While the market is not in an overheated state, this metric implies that Bitcoin might be entering a consolidation phase. Strategies to manage short-term volatility are advisable.

• 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 rose to a high of 1.112 during the week, before then reverting to 1.038, indicating a flat trend. Historically, sharp increases in this metric often precede corrections. However, with the daily aSOPR holding above 1, Bitcoin’s bullish momentum remains intact, signaling profitability among holders.

• 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 slightly from $28.82 billion to $28.86 billion. This growth, coupled with heightened volatility on December 5, reflects increased liquidation activity. The estimated leverage ratio dipped marginally from 0.218 to 0.217 but remains elevated, necessitating caution as high leverage could amplify price swings.

Outstanding Open Interests by Exchanges (Glassnode)

Exchanges’ combined estimated leverage ratio (Glassnode)

4. On-chain data

• Exchange inflows and outflows

Bitcoin continues to flow out of exchanges, with decreasing exchange-held reserves aligning with rising inflows into spot ETFs. These trends contribute to a tightening supply environment, enhancing the potential for upward price movements. The diminishing availability of Bitcoin on exchanges suggests a favorable setup for a long-term rally.

Bitcoin: Exchange Net Position Change(Glassnode)

• Number of Whale Wallets

The number of wallets holding 10,000 BTC or more returned to its decline, reaching a yearly low. Similarly, wallets with over 1,000 BTC remain flat, indicating limited reaccumulation. This trend highlights possible profit-taking by large holders, which could act as a headwind for further price gains.

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

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

5. Last Week’s Major News

• South Korea’s Martial Law Declared and Lifted

On December 3, President Yoon Suk-yeol declared martial law, marking the first such proclamation since South Korea’s democratization in 1987. However, the National Assembly quickly voted to rescind it, with the crisis resolved within six hours. Elon Musk reacted on X, calling the development “remarkable,” drawing international attention.

• Bitcoin (BTC) Breaks $100,000 for the First Time

Bitcoin reached a historic milestone, trading at $100,154.9 on December 5. Bitcoin’s market cap surpassed $2 trillion, rivaling global giants like Apple and NVIDIA.

• S&P 500 P/B Ratio Hits Post-Dot-Com Bubble High

The price-to-book (P/B) ratio of the S&P 500 reached its highest level since the dot-com bubble peak in March 2000. The P/B ratio is a key metric for assessing whether stocks are overvalued relative to their assets, raising concerns about potential market overheating.

6. Major economic events

Major economic events last week

Amid mixed U.S. macroeconomic indicators, Fed Chair Jerome Powell has expressed caution regarding interest rate cuts, emphasizing that inflation remains higher than expected. U.S. Treasury yields have stabilized, while the Nasdaq 100 index has reached an all-time high. However, close observation is needed to assess whether the index can sustain its upward momentum.

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

This week’s major economic events

Key market events this week include the release of the U.S. Consumer Price Index (CPI) and the European Central Bank’s (ECB) rate decision. Unless unexpected factors arise, the current trend of rate cuts is expected to continue.

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

Summary

Positive Indicators:

1. Continued capital inflows into cryptocurrency spot ETFs.

2. Stability in U.S. bond yields, supporting risk-on sentiment.

Negative Indicators:

1. Declining Bitcoin dominance, indicating a shift toward altcoins.

2. High open interest in Bitcoin futures, increasing volatility risks.

3. A reduction in large whale wallet holdings, suggests profit-taking by major investors.

Market Outlook: Bitcoin is trading near its all-time high, entering a phase of high volatility with potential for corrections. While capital inflows into spot ETFs maintain a positive outlook, caution is advised in the futures market due to elevated open interest. Ethereum remains a favorable choice for spot investments, continuing its strong momentum. Many altcoins have recently experienced significant gains, and a period of consolidation or mild correction is likely. Therefore, it is advisable to lock in profits or avoid overexposure to speculative assets. Given these conditions, a strategy focused on spot holdings in Ethereum and other high-quality cryptocurrencies is recommended, while monitoring broader economic developments closely.