2 metrics signal traders do not expect $2T crypto market cap anytime soon

After the rejection of the $1.95 trillion capitalization resistance on March 20, cryptocurrencies failed in their attempt to end the 42-day-old downtrend. Altcoins showed a strong rally, even though Bitcoin (BTC), gained 3.7% in the last seven days.

Between March 14-21, crypto markets’ aggregate capitalization saw a 6.2% rise to $1.92 trillion. This performance was positively influenced by Ether (ETH’s) 14% gains, Cardano (+ADA) increasing 13% and Solana(SOL) gaining 10%.

Market cap total for crypto, USD billion Source: TradingView

These assets did not make the most weekly gains of the top-80 coins but Ether might have fueled investors’ hopes after Glassnode’s data on-chain showed that ETH balances on cryptocurrency exchanges had fallen to their lowest level since 2018.

The results of comparing winners and losers is distorted as only two names showed negative performance over the past seven day.

Weekly winners and losers from the top-80 coins Source: Nomics

Ethereum Classic (ETC), rallied 51% following the HebeSwap Decentralized Exchange Application surpassing $290 million in total value. Ethereum Classic seems to be a Decentralized Finance (DeFi) hub, thanks to the growing liquidity pools.

AAVE gained 35% after its March 16 v3 liquidity pool upgrade, which added cross-chain asset functionality and a community contribution tool. AAVE also got a gas optimization model. Many wallet-based decentralized apps (DApps), such as Instadapp and Debank, 1Inch and Paraswap will be integrated.

Kusama (KSM), gained 31% after Parity Technology confirmed it would enable parachain (sidechain swaps) on the forthcoming 0.9.18 release. Manta Network’s privacy Dolphin Testnet on-chain reached 30,000 transactions in March 14.

Tether premium causes slight discomfort

The OKXTether (USDT premium) is a useful indicator of China-based retail traders crypto demand. It is used to measure the difference between peer-to-peer Chinese trades and the U.S. dollars.

An excessive buying demand can push the indicator above its fair value at 100 percent. During bearish markets, Tether’s market offer is flooded and Tether will receive a discount of 4% or more.

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

The Tether premium is currently at 99.9%. This is its lowest level since March 3rd. The indicator has shown a slight decline over the past week, although it is still far from panic selling.

However, the weaker retail demand does not make it any less concerning as it partly reflects the decrease in cryptocurrency capitalization which is down 46% over the past year.

Mixed sentiment is evident in futures markets

The embedded rate for perpetual contracts, also called inverse swaps or inverse swaps is usually charged every eight hours. This fee is used by exchanges to avoid imbalances in exchange risk.

Positive funding rates indicate that buyers (longs) are looking for more leverage. The opposite happens when shorts (sellers), require more leverage. Therefore, the funding rate turns negative.

On March 21, the accrued perpetual futures funding rate was 1. Source: Coinglass

The Ether and Bitcoin accumulated seven-day funding rates are slightly positive, as shown above. Although this data suggests a slightly higher demand from longs, (buyers), it is not significant. Solana’s positive weekly rate of 0.20% is 0.8% per month, so it should not concern most futures traders.

However, Terra (LUNA), and Polkadot(DOT) futures had slightly higher demand from shorts. The lack of Tether demand from Asia and mixed perpetual contracts premiums indicate a lack confidence among traders, despite recent price increases.

Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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