Total Crypto Market Cap Falls Below $1.2 Billion, But Data Shows Traders Less Inclined to Sell

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The total crypto market cap has been trading in a descending channel for the past 29 days and is currently showing support at the $1.17 trillion level. Over the past 7 days, Bitcoin (BTC) presented a modest decline of 2% and Ether (ETH) faced a correction of 5%.

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

The June 10 Consumer Price Index (CPI) report showed an 8.6% year-over-year increase and the crypto and equity markets immediately felt the impact, but it is uncertain whether the figure will convince the US Federal Reserve to waver in future interest rate hikes. .

Mid-cap altcoins fell again, sentiment is still bearish

Widespread bearish sentiment caused by weak macro data and uncertainties about the Federal Reserve’s ability to rein in inflation has severely affected crypto markets.

The Fear and Greed Index hit 11/100 on June 9, and the data-driven sentiment gauge has been below 20 since May 8.

Crypto fear and greed index. Source: alternative.me

This persistent reading of “extreme fear” indicates that investors are worried but, at the same time, it supposedly presents a buying opportunity.

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Below are the winners and losers of the last seven days. While the two major cryptocurrencies showed modest losses, a handful of mid-cap altcoins fell by 14% or more.

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

The Helium Community (HNT) endorsed the HIP-51 proposal, covering the economic and technical constructs needed to support new users, devices, and different types of networks, including cellular, VPN, and WiFi.

Chainlink (LINK) rose 22% after developers released a revamped Chainlink 2.0 roadmap, including native token staking.

Theta Token (THETA) gained 9.7% as the network announced support for live streaming using API technology that enabled instant and easy connection to apps and websites.

WAVES lost 28% after the $1,000 daily withdrawal limit for stablecoins was implemented in Vires Finance to avoid further pressure on the Neutrino Protocol Stablecoin (USDN).

Data shows traders less inclined to sell at current levels

The OKX Tether (USDT) premium is a good indicator of demand from China-based retail crypto traders. It measures the difference between peer-to-peer (P2P) transactions based in China and the US dollar.

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Excessive buying demand tends to pressure the indicator above the 100% fair value, and during bear markets the market supply of Tether is flooded and results in a discount of 4% or more .

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

On May 31, the price of Tether in Asian peer-to-peer markets recorded a 4% discount, signaling intense retail pressure. Curiously, the situation improved on June 10 after the indicator moved to a 1.5% discount. Although still negative, the metric shows investors’ willingness to buy the dip as the crypto’s total capitalization fell below $1.2 trillion.

To rule out externalities unique to the Tether instrument, traders should also analyze crypto futures markets. Perpetual contracts, also known as reverse swaps, have an embedded rate that is typically charged every eight hours. Exchanges use these fees to avoid currency risk imbalances.

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A positive funding rate indicates that longs (buyers) require more leverage. However, the opposite situation occurs when the shorts (shorts) require additional leverage, causing the funding rate to become negative.

Cumulative perpetual futures funding rate as of June 10. Source: Coinglass

Perpetual contracts reflected mixed sentiment after Bitcoin and Ethereum maintained a slightly positive (bullish) funding rate, but altcoin rates were negative. For example, BNB’s negative 0.20% weekly rate equals 0.8% per month, which is generally not a concern for derivatives traders.

Any recovery depends on stabilization of macroeconomic data

According to derivatives and trading indicators, investors are less inclined to reduce their positions at current levels, as shown by the modest improvement in the Tether premium.

The positive funding rate for Bitcoin and Ether futures shows traders’ growing appetite for leveraged long positions as the total crypto market capitalization drops below $1.2 trillion.

Unless the traditional markets and the macroeconomic scenario deteriorate, there is reason to believe that crypto investors are expecting a positive price development soon.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of TSWT. Every investment and trading move involves risk. You should conduct your own research when making a decision.