Total crypto market cap risks a dip below $1 trillion if these 3 metrics don’t improve


The total capitalization of the crypto market has ranged from $ 1.19 trillion to $ 1.36 trillion over the past 23 days, which is a relatively tight range of 13%. Meanwhile, earnings of 3.5% Bitcoin (BTC) and 1.6% Ether (ETH) during the week are far from encouraging.

To date, the total cryptocurrency market has dropped 43% in just two months, so investors are unlikely to celebrate it even as the formation of the descending triangle breaks up.

Total capitalization of the cryptographic market, millions of dollars. Source: TradingView

Concerns about regulation continue to weigh on investor sentiment, a notable example being Japan’s swift decision to enforce new laws following the collapse of the Terra USD (UST), now known as the TerraUSD Classic (USTC). On June 3, the Japanese parliament passed a bill to limit the issuance of stablecoin to licensed banks, registered money transfer agents, and trust companies.

Some mid-cap altcoins have risen, but overall sentiment has not been affected

Downward sentiment was clearly reflected in the cryptocurrency markets as the Fear and Greed index, a data-driven sentiment indicator, reached 10/100 on June 3rd. The indicator has been below 20 since May 8, as total cryptocurrency capitalization has lost $ 1.7 trillion. level to reach the lowest level since January 27th.

Crypto Fear & Greed Index. Source: alternative.me

Below are the winners and losers of the last seven days. Although the two leading cryptocurrencies showed modest gains, a handful of mid-cap altcoins rose 13% or more.

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

Waves rebounded 109% after liquidity returned to Vires Finance and the USDN stablecoin of the Neutrino Protocol reinstated its $ 1.00 fix after a daily withdrawal limit of $ 1,000 was imposed on USDT and USDC.

Cardano (ADA) has gained 19% as investors expect the “Vasil” rigid fork scheduled for June 29 to improve the scalability and functionality of the smart contract, encouraging deposits to long-term decentralized financing applications on the network.

Stellar (XLM) rose 18.6% after remittance giant MoneyGram partnered with the Stellar Development Foundation, launching a service that allows its users to send and convert stable currencies into fiat currencies.

Solana (SOL) lost 8% due to an unexpected shutdown of blockchain production on June 1, which required validators to coordinate another mains network restart after four hours of downtime. The persistent problem has adversely affected the network seven times in the last 12 months.

The data point to increased price pressure

The OKX Tether (USDT) premium is a good indicator of the demand of cryptocurrency retailers in China. It measures the difference between peer-to-peer (P2P) negotiations in China and the US dollar.

Excessive buying demand tends to push the indicator above 100% fair value and during bearish markets, Tether’s market supply is flooded and causes a 4% or higher discount.

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

Tether has been trading at a 2% or higher discount in Asian peer-to-peer markets since May 30th. However, the indicator showed a modest deterioration as it bottomed out with a 4% discount on June 1st. These data leave no doubt that retailers were shocked as the total cryptocurrency capitalization failed to break the $ 1.3 trillion resistance.

Perpetual contracts, also known as reverse swaps, have an integrated fee that is usually charged every eight hours. Stock markets use this rate to avoid exchange rate risk imbalances.

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

Accumulated perpetual futures financing rate on June 3rd. Source: Coinglass

Perpetual contracts reflected mixed sentiment as Bitcoin and Ethereum maintained a slightly positive (upward) funding rate, but altcoin rates were opposite. Solana’s negative weekly rate of 0.20% equals 0.8% per month, which is not a major concern for most derivatives traders.

According to derivatives and trading indicators, the market is at risk of seeing more downside. Evidence of this can be seen in the slightly higher demand for low altcoins positions and the apparent lack of appetite to buy in Asian retail markets.

Bulls need to show strength and maintain market capitalization support of $ 1.19 trillion to avoid an increase in leveraged sellers, bearish bets and subsequent negative price pressure.

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