Cryptocurrencies broke through the $1 trillion market capitalization resistance on Oct. 26, which had held firm for the previous 41 days. Despite Bitcoin’s (BTC) modest weekly gains, the aggregate value of 20,000 tokens increased by 8.5% between October 24 and 31.
The cryptocurrency market was positively affected by a 6.3% weekly rally in the Russell 2000 mid-cap stock index. Some encouraging news accompanied positive tailwinds from traditional markets.
For example, on October 26, 55,000 BTC was withdrawn from Binance, a record. Analysts typically view a reduction in the number of coins deposited on exchanges as a bullish indicator, as immediate selling pressure eases.
Additionally, exchange and wallet provider Blockchain.com has partnered with payment processing giant Visa to launch a cryptocurrency card. The cryptocurrency firm revealed on Oct. 26 that there would be no annual registration or transaction fees, and that users would earn 1% cashback on all digital asset purchases.
Instead of focusing on Bitcoin, crypto traders have spread their bets across altcoins. Consequently, the comparison of winners and losers among the 80 largest coins offers skewed results, with seven rising 20% or more in the last week.
Dogecoin (DOGE) soared 112% after Elon Musk, the billionaire CEO of SpaceX and Tesla, completed the acquisition of Twitter. Musk’s widely known passion for memecoin inspired traders to raise expectations for potential payment integrations.
Mina Protocol’s MINA token gained 28% following its ecosystem update report on Oct. 27, which highlighted its zero-knowledge proofnet. The protocol promises efficient zkApps layer 1 smart contracts, adding unique privacy features and the ability to connect to external data sources.
The native tokens of the Klaytn, Cosmos and Avalanche smart contract networks – KLAY, ATOM (ATOM) and AVAX (AVAX), respectively – surged following Ether (ETH)’s 16.5% gains. Additionally, the Ethereum network has remained stuck, with transaction fees averaging over $3 for the past three weeks.
Stablecoin demand remained neutral in Asia
The USD Coin (USDC) premium is a good indicator of demand from China-based retail crypto traders. It measures the difference between peer-to-peer transactions in China and the US dollar.
Excessive buying demand tends to push the indicator above 100% fair value, and during bear markets, the stablecoin’s market supply is flooded, causing a discount of 4% or more.
Currently, the USDC premium stands at 100.8%, unchanged from the previous week. Thus, despite the 8.5% rise in cryptocurrency market capitalization, there was no additional demand from Asian retail investors. However, these data should not be worrying, as they reflect in part that the total capitalization has fallen by 56% so far this year.
Futures markets show mixed sentiment
Perpetual contracts, better known as reverse swaps, have an implied rate that is typically charged every eight hours. Exchanges use this rate to avoid currency risk imbalances.
A positive funding rate indicates that longs (buyers) require more leverage. However, the opposite situation occurs when shorts (sellers) demand more leverage, causing the funding rate to turn negative.
As shown above, the seven-day cumulative funding rate is slightly positive or neutral for the largest cryptocurrencies by open interest. These data indicate a balanced demand between leveraged longs (buyers) and shorts (sellers).
Considering the lack of stablecoin demand in Asia and mixed perpetual premiums, traders lack confidence despite the total cryptocurrency capitalization passing the $1 trillion mark.
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