While several of the top 80 coins are up 12% or more over the past week, Tether’s premium in Asia and activity in the futures markets are indicative of a lack of confidence among buyers.
Cryptocurrencies have failed to overcome the $1.1 trillion market cap resistance that has persisted over the past 54 days. The top two coins have held back the market as bitcoin (BTC) has lost 2.5% and ether (ETH) has lost 1% over the past seven days, but a handful of altcoins have made a sustained rally.
The total capitalization of crypto markets decreased by 1% to $1.07 trillion between July 29 and August 5. The market was negatively affected by reports on August 4 that the US Securities and Exchange Commission (SEC) is investigating every US cryptocurrency exchange after the regulator accused a former Coinbase employee involved in insider trading.
Total capitalization of the crypto market, billion US dollars. Source: Trading View
While the two largest crypto assets failed to show weekly gains, traders’ appetite for altcoins has not waned. Investors were positively impacted by Coinbase’s exchange partnership with BlackRock, the world’s largest financial asset manager with $10 trillion in investments.
Coinbase Prime, a service offered to BlackRock clients, is an institutional trading solution that offers the trading, storage, financing, and deployment of over 300 digital assets. Therefore, comparing winners and losers among the top 80 coins is skewed because 10 of them have gained 12% or more in the last seven days:
Weekly winners and losers among the top 80 coins. Source: nomix
FLOW is up 48% after Instagram announced support for the Flow blockchain through Dapper Wallet. Meta-controlled social network (formerly Facebook) is expanding the integration of non-fungible tokens.
Filecoin (FIL) gained 38% after the Skyr v16 update on August 2, which tightened the protocol to avoid vulnerabilities.
VeChain (VET) gained 16.5% after some news sources incorrectly announced a partnership with Amazon Web Services (AWS). The VeChain Foundation clarified that the reference to AWS was first cited in a May 9 case study.
Tether premium has deteriorated slightly
OKX Tether (USDT) premium is a good indicator of demand from Chinese crypto retailers. It measures the difference between peer-to-peer transactions in China and the US dollar.
Excessive buying demand tends to push the indicator 100% above fair value, and during bear markets, Tether’s market supply overflows, resulting in a 4% or more discount.
Tether (USDT) between peers and USD/CNY. Source: OKH
The Tether premium is currently at 98.4%, the lowest level since June 10th. Although the indicator is far from the retail panic sales, the indicator has shown a slight deterioration over the last week.
However, weaker retail demand is not worrisome as it partly reflects the 69% decline in overall cryptocurrency capitalization since the start of the year.
Futures markets show mixed sentiment
Perpetual contracts, also known as reverse swaps, have an embedded rate that is usually calculated every eight hours. Exchanges use this fee to avoid currency risk imbalance.
A positive funding rate indicates that longs (buyers) require more leverage. However, the opposite occurs, where short sellers (sellers) require additional leverage, making the funding rate negative.
The cumulative funding rate for perpetual futures on August 5th. Source: Coinglass
As shown above, the 7-day cumulative funding rate for the largest cryptocurrencies is either slightly positive or open interest neutral. Such data indicates a balanced demand between leveraged long positions (buyers) and short positions (sellers).
Amid lack of demand for Tether in Asia and mixed perpetual contract premiums, traders lack confidence as the cryptocurrency’s total capitalization struggles with $1.1 trillion resistance. Given the uncertainty created by the SEC’s allegation against the former Coinbase executive, the bears seem to be having the upper hand at the moment.
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