The total cryptocurrency market capitalization has been trading in a descending channel for the past 29 days and is currently showing support at $1.17 trillion. Over the past 7 days, Bitcoin (BTC) has edged down 2% and Ether (ETH) has faced a 5% correction.
Crypto and stock markets felt the impact immediately after the June 10 Consumer Price Index (CPI) report showed an 8.6% year-over-year increase, but it is uncertain whether the figure will convince the Federal Reserve to hesitate in raising interest rates in the future.
Mid-cap altcoins fall further, market sentiment remains bearish
Weak macroeconomic data and uncertainty over the Fed’s ability to rein in inflation have led to a prevailing bearish sentiment that weighed heavily on crypto markets.
The Fear and Greed Index hit 11/100 on June 9, and the data-driven sentiment gauge has been below 20 since May 8.
This persistent “extreme fear” reading suggests investors are worried, but at the same time, it’s considered a buying opportunity.
Here are the winners and losers of the past 7 days. While the two leading cryptocurrencies posted modest losses, a handful of mid-cap altcoins fell 14% or more.
The Helium (HNT) community approved the HIP-51 proposal, which covers the economic and technical structures needed to support new users, devices, and different types of networks, including cellular, VPN, and WiFi.
Chainlink (LINK) rose 22% after developers released an improved Chainlink 2.0 roadmap, including native token staking.
Theta Token (THETA) rose 9.7% as the network announced support for live streaming using API technology that allows instant and easy connection to apps and websites.
WAVES fell 28% after the stablecoin’s daily withdrawal limit of $1,000 was implemented in Vires Finance to avoid further pressure on the Neutrino Protocol stablecoin (USDN).
Data shows traders are less willing to sell at current levels
The OKX Tether (USDT) premium is a good measure of demand from retail crypto traders in China. It measures the difference between peer-to-peer (P2P) transactions in China and the U.S. dollar.
Excessive buying demand tends to stress the indicator above 100% of fair value, and during bearish markets, Tether’s market quotes are flooded and result in discounts of 4% or more.
On May 31, the price of Tether in the Asian P2P market entered a 4% discount, indicating strong retail sales pressure. Curiously, things improved on June 10 after a 1.5% discount to the indicator. While still negative, the indicator shows investors are willing to buy the dip when the total cryptocurrency market capitalization falls below $1.2 trillion.
To rule out externalities specific to Tether instruments, traders must also analyze the cryptocurrency futures market. Perpetual contracts, also known as inverse swaps, have embedded rates that are typically charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.
A positive funding rate indicates that bulls (buyers) need more leverage. However, when the shorts (sellers) need additional leverage, the opposite happens, causing the funding rate to go negative.
Perpetual contracts reflected mixed sentiment after Bitcoin and Ethereum held slightly positive (bullish) funding rates, but altcoin rates were negative. For example, a negative rate of 0.20% per week on BNB is equal to 0.8% per month, which is usually not a concern for derivatives traders.
Any recovery depends on stabilizing macroeconomic data
According to derivatives and trading metrics, investors are less inclined to underweight at current levels, as indicated by the modest improvement in Tether’s premium.
Positive funding rates for bitcoin and ethereum futures indicate a growing appetite for leveraged long positions as the total cryptocurrency market cap falls below $1.2 trillion.
Unless traditional market and macroeconomic conditions deteriorate, there is reason to believe that crypto investors can expect positive price action soon.
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