The $1.1 trillion market capitalization resistance has held firm for 54 days and cryptocurrencies have not broken it. The market was held back by the two largest coins, Bitcoin (BTC), which lost 2.5% and Ether(ETH), which retraced 1% over seven days. However, a few altcoins showed a strong rally.
Between July 29th and August 5th, the aggregate capitalization of crypto markets fell 1% to $1.07 trillion. According to reports, the U.S. Securities and Exchange Commission is now investigating all U.S. crypto-exchanges after a former Coinbase employee was charged with insider trading. This negatively affected the market.
Source: TradingView Source: TradingView
Although the top cryptoassets could not post weekly gains, traders still had a strong appetite for altcoins. The Coinbase exchange partnership was a positive for investors. It was partnered with BlackRock, the largest financial asset manager in the world, and has managed investments totaling $10 trillion.
BlackRock clients have access to Coinbase Prime, an institutional trading solution that offers trading, custody and financing for over 300 digital assets. Comparing the top-80 coins’ winners and losers gives distorted results as 10 of them rallied more than 12% over the past seven day.
Weekly winners and losers from the top-80 coins Source: Nomics
FLOW gained 48% following the announcement by Instagram that it supports the Flow blockchain via Dapper Wallet. Meta, the social network that was formerly Facebook, is expanding integration of nonfungible tokens.
After the Aug. 2 upgrade to v16 Skyr, Filecoin (FIL), gained 38%. This hardens the protocol to avoid potential vulnerabilities.
VeChain (VET), gained 16.5% following incorrectly reported news about an Amazon Web Services partnership. VeChain Foundation stated that AWS was first mentioned in a May 9 case report.
Tether premium slightly declined
The OKXTether premium (USDT), is a useful indicator of China-based crypto retail traders demand. It is used to measure the difference between peer-to-peer Chinese trades and the United States Dollar.
An excessive buying demand can push the indicator above its fair value at 100 percent. During bearish markets, Tether’s market offer can be 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 98.4%. This is its lowest level since June 10th. The indicator has shown a slight decline over the past week, despite being far from panic selling.
The weaker retail demand isn’t troubling, partly because it partially reflects the 69% decrease in cryptocurrency capitalization year-to-date.
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.
Aug. 5: Accumulated perpetual forwards funding rate Source: Coinglass
The accumulated seven-day funding rate for the largest cryptocurrencies with open interest is either slightly positive (or neutral) as shown above. This data shows a balanced demand for leverage between buyers (sellers) and sellers (buyers).
As crypto capitalization struggles to meet the $1.1 trillion resistance, traders are not confident due to the lack of Tether demand from Asia and mixed perpetual contracts premiums. Given the uncertainty caused by Coinbase’s former manager being charged by the SEC, bears appear to be in control.
Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.