Cryptocurrency prices have been under pressure from a bearish trend formation over the past eight weeks, resulting in the total market capitalization declining by 2.4% between June 4 and June 11 and reaching its lowest point in more than two months at $1.06 trillion.
This time, Bitcoin (BTC) was not the impetus for the move, as it increased by 0.8% in the course of the week. The downward pressure instead came from a few altcoins that experienced a decrease of more than 15%, including BNB (BNB), Cardano (ADA), Solana (SOL), Polygon (MATIC) and Polkadot (DOT).
It has been observed that the downward trend which began in mid-April has repeatedly tested the support level, suggesting that the bulls will have to work harder to bring about a reversal to the upside.
The US Securities and Exchange Commission labeled multiple altcoins as securities in legal actions taken against crypto exchanges Binance and Coinbase last week.
Despite the increasingly restrictive regulations on cryptocurrencies, two derivatives metrics suggest that bulls are still not giving up hope, but it will be difficult for them to break the bearish price trend and move upwards.
Crypto exchanges are under severe constraints in the U.S.
On June 9, Binance.US declared the upcoming cessation of U.S. dollar deposits and withdrawals, in addition to delisting USD trading pairs. The exchange revealed its plan to convert to a crypto-only exchange, however, it will still maintain a 1:1 proportion for customer assets. The SEC issued a crisis order on June 6 to freeze the resources of Binance.US.
On June 9th, Crypto.com exchange declared that it would no longer be providing services to institutional customers in the U.S. The Singapore-based business attributed the decision to a lack of customer demand, however the coinciding of this announcement with the recent measures taken against Coinbase and Binance has caused doubt, as highlighted by CryptoTea, the originator of UtilizeWeb3.
Despite not facing any attacks from the SEC, Ether (ETH) still experienced a 3.5% decrease in trading between June 4 and June 11 after co-founder Vitalik Buterin proclaimed that the Ethereum network would “fail” if scaling did not occur. On June 9, Buterin wrote on his personal blog that the success of Ethereum is contingent on layer-2 scaling, wallet security, and privacy-preserving features.
Derivatives markets show balanced leverage demand
Perpetual contracts, otherwise referred to as inverse swaps, typically have an embedded rate that is assessed on a regular basis every eight hours.
A positive funding rate signifies that those who are long (buyers) are seeking greater leverage. Conversely, when shorts (sellers) need more leverage, the funding rate will become negative.
The seven-day funding rate for BTC and ETH was even, suggesting that there was an equal amount of leveraged longs (buyers) and shorts (sellers) utilizing perpetual futures contracts. Interestingly, BNB, SOL and ADA did not show any extreme short demand after their prices decreased by 15% or more in the course of a week.
Tether demand in Asia shows modest resilience
The premium of Tether (USDT) is a good indicator of the demand from China-based cryptocurrency retail traders. It is calculated by comparing the prices of China-based peer-to-peer trades and the US dollar.
Excessive buying demand causes the indicator to be higher than its fair value of 100%, and in bearish markets, the market offer of Tether is overabundant, resulting in a discount of 2% or more.
The current Tether premium on OKX is at 99.8%, which reflects a stable demand from retail investors. This is especially impressive given the 17.7% decline in the value of the cryptocurrency markets over the past two months, from $1.29 trillion to $1.06 trillion.
The Winklevoss twins believe that Democrats’ efforts to combat cryptocurrency will cause them to lose support from important voters.
Given the balanced demand, stablecoin markets, and funding rate, bulls should be content since the recent regulatory FUD was unable to cause the cryptocurrency market capitalization to dip below $1 trillion.
It is uncertain if the market will be able to break away from the bearish trend. Additionally, there is no obvious justification for bulls to hastily wager on a V-shaped rebound, considering the doubtfulness in the regulatory framework. In the end, bears are in a secure position despite the robustness in derivatives and stablecoin measurements.
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