Marketing could be easier, but traders are on the sidelines until BTC confirms $ 20K in support

Marketing could be easier, but traders are on the sidelines until BTC confirms $ 20K in support – Mail Bonus

The total market value of cryptocurrency fell off a cliff between June 10 and June 13 as it fell below $ 1 trillion for the first time since January 2021. Bitcoin (BTC) fell by 28% within a week and Ether (ETH) faced tormenting 34.5% correction.

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

At present, the total financing of cryptocurrencies is $ 890 million, a 24.5% negative performance since June 10th. This certainly raises the question of how two leading cryptocurrencies managed to outperform the remaining currencies. The answer lies in the $ 154 billion value of stablecoins, which distorts overall market performance.

Even if the film shows support at the $ 878 billion level, it will take some time for traders to capture all the recent events that have affected the market. For example, the US Federal Reserve raised interest rates by 75 basis points on June 15, the 28-year high. The Central Bank also began cutting its balance sheet in June with the aim of lowering its $ 8.9 trillion position, including collateralised securities (MBS).

The venture capital firm Three Arrows Capital (3AC) has reportedly failed to meet marginal calls from its lenders, raising a huge red flag due to bankruptcy across the industry. The company’s extensive exposure to the Grayscale Bitcoin Trust (GBTC) and Lido’s Staked ETH (stETH) was partly responsible for the mass disclosure events. A similar case forced Celsius to suspend user withdrawals on June 13.

The spirit of investing is really broken

The Bearish sentiment was clearly reflected in cryptocurrencies as the Fear and Greed Index, a data-driven sentiment meter, went up to 7/100 on June 16th. The reading was the lowest since August 2019 and was last seen outside the “extreme fear” area on 7 May.

Crypto Fear and Greed Index. Source: alternative.me

Below are the winners and losers since June 10th. Interestingly, Ether was the only top-10 cryptocurrency found on the list, which is unusual with strong corrections.

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

WAVES lost an additional 37% after the project’s largest diversified financial application (DeFi) Vires Finance introduced a daily $ 1,000 stablecoin withdrawal limit.

Ether dropped by 34.5% as developers postponed the transition to a two-month share proof of consultation. The “difficulty bomb” will effectively stop mining, paving the way for unification.

AAVE fell 33.7% after MakerDAO voted to close Aave’s lending platform to create a DAI for the unsecured lending pool. The decision under the auspices of the community aims to reduce the exposure of the Protocol to the potential impact of mortgaged Ether (stETH) collateral.

Asian traders flew into stablecoins

The OKX Tether (USDT) premium is a good indicator of China’s retail demand in China. It measures the difference between Chinese peer-to-peer trade (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

Contrary to expectations, Tether had been trading in Asian peer-to-peer markets since June 12. Despite high sales of cryptocurrencies, investors have sought protection in stablecoins, instead of switching to fiat currency. This movement lasted until June 17, when the USDT paired its price against the official exchange rate.

Measurements of cryptocurrency derivatives should be analyzed to exclude external effects specific to the stablecoin market. For example, there are perpetual contracts with a built-in fee that are 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 ratio June 17th. Source: Coinglass

These derivative contracts show greater demand for indebtedness in short bear positions across the board. Although the numbers of Bitcoin and Ether have been insignificant, the TRX symbol and the Polkadot (DOT) situation are worrying.

The negative 0.90% weekly rate of Pokadot is equivalent to 3.7% per month, which means that those who bet on the price reduction are willing to pay a reasonable fee to maintain their indebtedness. This is usually interpreted as a sign of confidence from the bear, hence a slight concern.

The market fell by 70% and there is still no demand for indebtedness

The big question is how, on the other hand, investor fears and lack of appetite for buyers using indebtedness despite a 70% correction from the peak in November 2021. It is encouraging to know that Asian traders moved their positions to Tether instead of leaving all markets to fiat deposits.

There probably won’t be a clear sign of bottom formation, but Bitcoin bulls need to hold on to $ 20,000 to avoid breaking the 13-year-old pattern of never breaking below the previous 4-year cycle maximum.

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.