Recent Bitcoin gains may signal a bottom However, some Metrics remain Bearish…
The market capitalization of all cryptos increased by 5percent, however various indicators of trading indicate that investors are skeptical of this rally as an indication of a trend shift.
On May 30, the total market capitalization for crypto increased 4percent and is currently just a few steps away from a $1.3 trillion value. This was enough to erase the losses of earlier in the week. The gain was primarily driven due to bitcoin’s (BTC) 4.9 percent gain during the time. Total crypto market cap, USD billion. Source: TradingView
In addition to Bitcoin, Cardano (ADA) was the sole large-cap cryptocurrency that ended the week on a positive note with a 4.5 percent performance. However, Ether (ETH), BNB, Ripple (XRP), and Solana (SOL) did not manage to achieve their weekly gains.
Bitcoin’s turnaround occurred following the United States stock market presented gains for the first time following seven weeks of negative performance. A losing streak that was the longest over 10 years in the S&P 500 was followed by the 6.6 percent gain at the closing bell on the 22nd of May.
As per Yahoo! Finance “a favorable batch of quarterly results from major retailers helped at least temporarily mitigate concerns over the toll [that …] inflationary headwinds could take on profit margins.” For example, Macy’s (M) gained 29.1 percent during the week. Then, Nordstrom (JWN) 25.4 percent good performance, as well Ross Stores (ROST) rallied by 21.5 percent.
Incredibly, JP Morgan sent out an information note to its customers on May 25 declaring that $38,000 was a fair value of Bitcoin. The investment bank that is a global player declared that Terra’s (LUNA) fall was not a threat to the cryptocurrency venture capital market.
On May 23, at the World Economic Forum (WEF) in Davos, Switzerland, PayPal vice president Richard Nash stated the company’s determination to take on all blockchain and crypto services. Following the introduction of its Bitcoin trading in the United States in 2020, PayPal continues to expand its cryptocurrency-related service.
Here is a list of winners as well as losers over the last seven days. While the top cryptocurrency exchanges showed moderate gains, a few altcoins with mid-capitalization showed high volatility. Weekly winners and losers among the top 80 coins. Source: Nomics
Synthetix (SNX) increased 15.8 percent after Kwenta the zero-slippage derivatives trading app powered by Synthetix was able to reach $325 million in total volume.
Helium (HNT) increased 15.2 percent after the details of improvements proposal #51 were announced the 27th of May. The new proposal introduces a framework that allows subnets to use their own token and management.
STEPN Governance (GMT) was able to lose 14.6 percent after blocking users who reside in China mainland China on its mobile application.
Terra Luna Classic (LUNC) which was earlier called LUNA fell 12.2 percent following the South Korean authorities summoning all employees of Terraform Labs as part of an extensive investigation.
Because of the varied outcomes of altcoin markets, it is important to study how traders are positioned in relation to the indicators of derivatives and trading.
The Tether premium indicates that there is no demand for retail
The Tether OKX (USDT) price is a reliable indicator of the Chinese retail trader crypto demand. It is a measure of the differences between Chinese-based peer-to-peer (P2P) trades as well as trades in the United States dollar.
The excessive demand for buying tends to increase the pressure on the indicator to a higher value. However when markets are bearish Tether’s market is overwhelmed, resulting in an increase of 4% or more discount. Tether (USDT) peer-to-peer vs. USD/CNY. Source: OKX
Between May 23 June 30 May 23 and 30, and between May 23 and 30, Tether’s cost in CNY is averaging a 22% discount, which indicates that there is no retail demand. Additionally than that, the 4% cryptocurrency market capitalization surge on May 30 didn’t affect investors’ moods.
The indicators for derivatives are slightly bearish for altcoins.
Perpetual contracts, also referred to as inverse swaps are characterized by an embedded rate, which typically is per hour for the duration of eight hours. Exchanges make use of this charge to reduce risks to exchanges that are not balanced.
A high funding rate means that the longs (buyers) need more leverage. But, the reverse is as shorters (sellers) require more leverage, which causes the rate of funding to go negative. Accumulated perpetual futures funding rate on May 30. Source: Coinglass
Perpetual contracts are a reflection of mixed feelings in that Bitcoin and Ether had a slight negative (bullish) fund-raising rate while altcoins indicated the opposite. For instance, Solana’s negative 0.20 percent rate for the week is 0.8 percent per month, which isn’t relevant to most traders in derivatives.
The research indicates that investors aren’t eager to prove whether the price rise indicates a shift in the trend. Although the market’s total capitalization has risen above the $1.3 trillion mark and traders are pricing higher chances of a decline. There is no definitive evidence of a bottoming market in terms of the trading metrics.