The total cryptocurrency market capitalization has hovered between $1.19 trillion and $1.36 trillion over the past 23 days, which is a relatively tight 13% range. During the same time, Bitcoin (BTC)’s 3.5% and Ether’s (ETH) 1.6% gains on the week are far from encouraging.
To date, the total cryptocurrency market is down 43% in just two months, so investors are unlikely to celebrate even if the descending triangle formation breaks to the upside.
Regulatory concerns continue to weigh on investor sentiment, with Japan’s swift move to implement new laws following the collapse of Terra USD (UST), now known as TerraUSD Classic (USTC), exemplified by Japan’s swift move to implement new laws. On June 3, the Japanese parliament passed a bill to limit the issuance of stablecoins to licensed banks, registered money transfer agents, and trust companies.
Some mid-cap altcoins rose, but nothing changed
The bearish sentiment was clearly reflected in the crypto markets, as the Fear and Greed Index, a data-driven gauge of sentiment, reached a reading of 10/100 on June 3. The indicator has been below 20 since May 8, when the total cryptocurrency capitalization fell below the $1.7 trillion level to hit the lowest level since January 27.
Here are the tokens that have risen and fallen the most in the last seven days. While the top two cryptocurrencies posted modest gains, a handful of mid-cap altcoins were up 13% or more.
Waves surged 109% after liquidity was returned to Vires Finance and Neutrino Protocol stablecoin USDN restored its peg to the US dollar after a daily withdrawal limit of $1,000 in USDT and USDC was imposed.
Cardano (ADA) gained 19%, as investors expect the “Vasil” hard fork, scheduled for June 29, to improve the scalability and functionality of smart contracts, incentivizing deposits in decentralized finance applications. the network, of which so much is spoken.
Stellar (XLM) surged 18.6% after remittance giant MoneyGram partnered with the Stellar Development Foundation, launching a service that allows its users to send and convert stablecoins into current currencies.
Solana (SOL) lost 8% due to an unexpected block production outage on June 1, forcing validators to coordinate another mainnet reboot after spending four hours down. This persistent issue has negatively affected the network seven times in the last 12 months.
Data points to further pressure on prices
The Tether (USDT) premium on OKX is a good indicator of demand from China-based retail cryptocurrency traders. It measures the difference between China-based peer-to-peer (P2P) trading and the US dollar.
Excessive buying demand tends to push the indicator above 100% fair value and during bear markets, Tether’s market supply is flooded causing a discount of 4% or more.
Tether has been trading at a discount of 2% or more on Asian markets since May 30. However, the gauge showed modest deterioration as it bottomed out at a 4% discount on June 1. This data leaves no doubt that retail traders were caught off guard as the total cryptocurrency capitalization failed to break through the $1.3 trillion resistance.
Perpetual contracts, also known as reverse swaps, have an implied rate that is typically charged every eight hours. Exchanges use this rate to avoid imbalances in exchange risk.
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.
Perpetual contracts reflected a mixed sentiment, with Bitcoin and Ethereum holding a slightly positive (bullish) funding rate, but altcoin rates were the opposite. Solana’s 0.20% negative weekly rate equates to 0.8% per month, which is not much of a concern for most derivatives traders.
Based on derivatives and trading indicators, the market is at risk of further declines. Proof of this is the slightly higher demand for short positions in altcoins and the apparent lack of buying appetite from Asia-based retail markets.
Bulls must show strength and hold support at the $1.19 trillion market cap to avoid an increase in leveraged sellers, bearish bets, and subsequent negative price pressure.
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