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Total crypto market cap shows strength even after the Merge and Federal Reserve rate hike

Cryptocurrencies have been in a bearish trend since mid-August after failing to break through the $1.2 trillion market cap resistance. Even the current bearish trend and brutal 25% correction are not enough to break the three-month uptrend.

In the seven days to September 21st, the total market capitalization of the cryptocurrency market fell by 7.2% to $920 billion.

Total crypto market cap, billions of dollars.Source: Trading View

By increasing the cost of borrowing cash, monetary authorities aim to keep inflationary pressures in check while increasing the burden of consumer finance and corporate debt. This explains why investors have turned away from risky assets such as stock markets, foreign currencies, commodities and cryptocurrencies. For example, WTI crude oil prices have fallen 6.8% since September 14, and the MSCI China Stock Market Index has fallen 5.1%.

Ether (ETH) also posted a 17.3% retracement over the 7-day period, further worsening the performance of many altcoins. The Ethereum network merge and subsequent impact on other GPU-minable coins has resulted in some skewed results with the worst weekly performance.

Weekly winners and losers among the top 80 coins.Source: Nomix

Chiliz (CHZ) is up 21.5% after the successful launch of two Fan Tokens by the MIBR esports team and the Brazilian VASCO soccer team.

XRP surged 16.6% after Ripple Labs asked a federal judge to immediately rule whether the company’s XRP token sale violated U.S. securities laws.

ApeCoin (APE) rose 15% as the community expected the launch of a staking program. detailed By Horizon Labs on September 22nd.

RavenCoin (RVN) and Ethereum Classic (ETC) have regained most of their gains from the previous week as investors realized that hashrate gains from Ethereum miners did not necessarily translate into higher adoption.

Despite the adjustment, traders’ appetite didn’t go away

OKX Tether (USDT) Premium is a good gauge of demand for China-based retail cryptocurrency traders. Measures the difference between China-based peer-to-peer transactions and the US dollar.

Excessive buying demand tends to put pressure on indicators above 100% fair value, and in bear markets, Tether is flooded with market offers, resulting in discounts of 4% or more.

Tether (USDT) peer-to-peer vs USD/CNY. Source: OKX

The Tether premium is now at 100.7%, the highest level since June 15th. Although still below the neutral zone, the metric showed a slight improvement over the past week. This data should be considered a win given that the cryptocurrency market dropped his 7.2%.

Perpetual contracts, also known as inverse swaps, have built-in rates that are typically billed every 8 hours. Exchanges use this fee to avoid currency risk imbalances.

A positive funding rate indicates that longs (buyers) are demanding more leverage. However, the opposite situation occurs when the short (seller) requires additional leverage, resulting in a negative funding rate.

Cumulative Perpetual Futures Funding Rate on Sept. 21.Source: Coin Glass

As noted above, the 7-day cumulative funding rate was negative for all altcoins. While this data shows excessive demand for shorts (sellers), investors who targeted free-fork coins during the merge may have bought ETH and sold futures contracts to hedge their positions. So high that it could be dismissed in the Ether case.

More importantly, Bitcoin’s funding rate remained slightly positive during a week of price declines and potentially bearish news from the FED. Now that this important decision has been made, investors tend to avoid making new bets until they have new data that provide insight into how the economy will adjust.

Overall, Tether premiums and futures funding rates show no signs of stress, which is a positive given how poorly the crypto markets are performing.

The views and opinions expressed herein are solely author They do not necessarily reflect the views of Cointelegraph. All investment and trading movements involve risk. You should do your own research when making a decision.