The total crypto market capitalization has fluctuated in the range of 17% in the last 28 days from $840 billion to $980 billion region. Price movement is relatively tight given the recent market sell-off catalysts and the extreme uncertainties surrounding the Three Arrows Capital controversy.
From July 4th to July 11th, Bitcoin (BTC) gained a modest 1.8%, while the price of Ether (ETH) remained flat. More importantly, the overall crypto market is down by 50% in just three months, which means traders are giving high chances of a falling triangle forming below its $840 billion support.
#bitcoin Bottom Scenario:
since #B T c downtrend from its peak $BTC Each time is cultivating the same decreasing triangle pattern, but each triangle is getting smaller
We can see another breakdown from the triangle and the 400WMA could be below #crypto #cryptocurrency #cryptocurrency https://t.co/BsXBAJHa4P pic.twitter.com/oAQ0IX5XgU
— Aditya Siddharth Roy❁ (@adityaroypspk) 7 July 2022
Regulatory uncertainties have continued to dampen investor sentiment since the European Central Bank (ECB) released a report concluding that a lack of regulatory oversight has added to the recent decline of algorithmic stablecoins. As a result, the ECB recommended supervisory and regulatory measures to control the potential impact of stablecoins in the financial systems of European countries.
On July 5, John Cunliffe, deputy governor of financial stability at the Bank of England (BOE), recommended a set of rules to deal with cryptocurrency ecosystem risks. Cunliffe called for a regulatory framework similar to traditional finance to protect investors from irreversible losses.
Some mid-cap altcoins edged higher and sentiment improved slightly
The bearish sentiment ended June-end, according to the data-driven sentiment gauge, the Fear and Greed Index. The indicator hit a record low of 6/100 on June 19, but corrected to 22/100 on July 11 as investors began to build confidence in the bottom half of the market cycle.
Below are the winners and losers of the past seven days. Note that some mid-cap altcoins are up 13% or more, even though the overall market capitalization has increased by 2%.
AAVE gained 20% as Lending Protocol announced plans to launch an algorithmic stablecoin, a proposal subject to the decentralized autonomous organization of the community.
Polygons (MATIC) grew by 18% after previously ongoing projects in the Terra ecosystem were migrated to Polygon.
Chiliz (CHZ) jumped 6% after the Socios.com app announced community-related features to boost user engagement and integration with third-party-approved developers.
Asia based flows and derivatives demand is neutral and balanced
OKEx Tether (USDT) measures the gap between premium China-based peer-to-peer trades and the official US dollar currency. Excessive cryptocurrency retail demand is putting pressure on the indicator above the 100% fair value. On the other hand, a bearish market could flood Tether’s market offer, leading to a discount of 4% or more.
Tether has been trading at a 1% or more discount in Asian peer-to-peer markets since July 4. The indicator failed to show an improvement in sentiment on July 8 as the total crypto market capitalization flirted with $980 billion, the highest level in 24. Day.
To confirm whether the lack of enthusiasm is confined to stablecoin flows, one must analyze the futures market. Perpetual contracts, also known as inverse swaps, have an embedded rate that is typically charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.
A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite occurs when shorts (sellers) require additional leverage, turning the funding rate negative.
related: Analysts Say Bitcoin Range Most Likely for ‘Consolidation’ Unless a ‘Macro Catalyst’ Emerges
Perpetual contracts showed a neutral sentiment, with Bitcoin, Ethereum and XRP showing mixed funding rates. Some exchanges offer a slightly negative (bearish) funding rate, but this is far from punitive. The only exception was Polkadot’s (DOT) negative 0.35% weekly rate (equivalent to 1.5% per month), but this is not particularly a concern for most traders.
Given the lack of buying appetite from Asia-based retail markets and the absence of leveraged futures demand, traders can conclude that the market is not comfortable betting on the $840 billion total market cap support level.
The views and opinions expressed here are solely those of Author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should do your own research when making a decision.
