Altcoin prices took a brief reversal, but derivatives forecast a worsening situation

Altcoin prices took a brief reversal, but derivatives forecast a worsening situation – Mail Bonus

On May 12, the total market value of cryptocurrency reached its lowest closing in 10 months and the scale continues to test the $ 1.23 trillion support level. However, the next seven days were relatively calm while Bitcoin (BTC) rose by 3.4% and Ether (ETH) added a modest 1.5%. At present, the total cryptocurrency ceiling stands at $ 1.31 trillion.

Total market value of cryptocurrencies, billions of US dollars. Source: TradingView

Ripples from the collapse of Terra (LUNA) continue to affect the cryptocurrency market, especially the diversified financial industry. In addition, recent declines in traditional markets have led to a loss of $ 7.6 trillion in market value from the Nasdaq stock market index, which is higher than the dot-com bubble and sales in March 2020.

On May 17, US Federal Reserve Chairman Jerome Powell confirmed their plans to curb inflation by raising interest rates, but warned that the Fed’s austerity move could affect unemployment.

The Bearish sentiment reached the cryptocurrency markets and the “Fear and Greed Index”, a data-driven attitude meter, reached 8/100 on 17 May. This is the lowest level since March 28, 2020, two weeks after the general collapse that sent oil futures to a negative level and brought Bitcoin (BTC) below $ 4,000.

Below are the winners and losers of the last seven days. Although two leading cryptocurrencies made modest gains, a handful of altcoins’ capital letters rose by 15% or more.

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

Monero (XMR) rose 22% as investors waited for the “tail release” to be introduced on block 2,641,623 or sometime around 4 June. decided to include a 0.6 XMR minimum wage in each block, so miners are not 100% dependent on transaction fees.

Cosmos (ATOM) rose 16.5%, a move that appears to be part of a broader recall that began on May 12 when ATOM fell to an eleven-month low of close to $ 8. It should be noted that its parent chain, Cosmos Hub, witnessed a huge outflow of capital from its liquid assets, according to a report from the Cointelegraph.

Klaytn (KLAY), blockchain-backed by the South Korean internet giant Kakao, announced on May 16 that it would provide infrastructure and first nodes and develop early-stage applications for the Blockchain-based service network (BSN), which provides access to the Chinese market.

Tether premium shows slight discomfort

The OKX Tether (USDT) premium is a good indicator of China’s retailers’ cryptocurrency demand. It measures the difference between Chinese P2P and the US dollar.

Excessive buying demand tends to push the index above fair value at 100% and in a bearish market, Tether’s market offer is flooded, resulting in a 4% or higher discount.

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

The Tether premium peaked at 5.4% on May 12, its highest value in more than six months, but the movement may have been related to the large outflow of the Terra ecosystem, which was mainly USD Terra (UST) stablecoin.

Recently, the indicator showed a modest deterioration as it now has a 1.8% discount. The lack of retail demand is not particularly worrying because the total market value of cryptocurrencies lost 34% last month.

Altcoin’s future reflects a lack of interest in debt

Perpetual contracts, also known as inverse swaps, have a built-in exchange rate that is usually charged every eight hours. Stock exchanges use this fee to avoid exchange rate risk imbalances.

A positive financing ratio indicates that longs (buyers) demand more indebtedness. However, the opposite is true when shorts (sellers) demand increased indebtedness, which causes the financing ratio to be negative.

Cumulative perpetual future financing rate May 20. Source: Coinglass

Perpetual contracts reflect mixed attitudes as Bitcoin and Ethereum maintain a slightly positive (bullish) funding ratio, while altcoins indicate the opposite. For example, a negative 0.35% weekly rate of Solana (SOL) equals 1.5% per month, which is not a concern for most derivatives sellers.

Given that derivatives show little progress, there is a lack of investor confidence as the total market value of cryptocurrencies comes from holding 1.23 trillion supports. Until this attitude improves, the chances of an unfavorable price change are still high.

The views and opinions expressed herein are theirs alone author and do not necessarily reflect the views of Cointelegraph. Every investment and business involves risk. You should do your own research when making a decision.