Total crypto market cap drops below $1.2 trillion, but data shows traders are less inclined to sell

Total crypto market cap drops below $1.2 trillion, but data shows traders are less inclined to sell

The total crypto market cap has been trading in a descending channel for the past 29 days, currently showing support at $1.17 trillion. Over the past 7 days, Bitcoin (BTC) has dropped a modest 2% and Ether (ETH) is facing a 5% correction.

Total crypto market cap, billion USD. Source: TradingView

The June 10 consumer price index (CPI) report was up 8.6% year-on-year, and crypto and stock markets felt the impact right away, but it’s unclear whether the figure will convince the Federal Reserve to hesitate on future rate hikes. .

Mid-cap altcoins drop further, sentiment still bearish

The general bearish sentiment, driven by weak macroeconomic data and uncertainties about the Federal Reserve’s ability to curb inflation, has severely impacted the crypto markets.

The Fear and Greed Index hit 11/100 on June 9, and the data-driven sentiment indicator has been below 20 since May 8.

Crypto Fear and Greed Index. source: alternative.me

This persistent reading of “extreme fear” indicates that investors are worried but at the same time supposedly presenting a buying opportunity.

Below are the winners and losers of the last seven days. Two leading cryptocurrencies offered modest losses, while a handful of mid-range altcoins fell 14% or more.

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

Helium’s (HNT) community has approved the HIP-51 proposal, which covers new users, devices, and the economic and technical structures needed to support different types of networks, including cellular, VPN, and WiFi.

Chainlink (LINK) rallied 22% after developers released a revamped Chainlink 2.0 roadmap, including native token staking.

Theta Token (THETA) gained 9.7% as the network announced live streaming support using API technology that provides instant and easy connectivity to apps and websites.

WAVES lost 28% after the $1,000 daily withdrawal limit was implemented for stablecoins on Vires Finance to avoid further pressure on Neutrino Protocol Stablecoin (USDN).

Data shows traders are less inclined to sell at current levels

The OKX Tether (USDT) premium is a good indicator of China-based retail crypto trader demand. It measures the difference between China-based peer-to-peer (P2P) transactions and US dollars.

Excessive buying demand tends to put the indicator under 100% above fair value, and in bearish markets Tether’s market offering is flooded, resulting in a 4% or higher discount.

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

On May 31, the price of Tether in Asian peer-to-peer markets entered a 4% reduction, pointing to heavy retail pressure. Interestingly, the situation improved on June 10, after the indicator went down 1.5%. Although it remains negative, the metric shows investors’ willingness to buy the dip as the total crypto capitalization drops below $1.2 trillion.

Traders should also analyze crypto futures markets to exclude externalities specific to the Tether tool. Perpetual contracts, also known as reverse swaps, have an embedded rate that is typically charged every eight hours. Exchanges use this fee to avoid currency risk imbalances.

A positive funding rate indicates that long-term (buyers) demand more leverage. However, the opposite happens when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

Perpetual futures funding rate accumulated on June 10. Source: Coinglass

Perpetual contracts reflected mixed sentiment after Bitcoin and Ethereum held a somewhat positive (bullish) funding rate, but altcoin rates were negative. For example, BNB’s negative 0.20% weekly rate equates to 0.8% monthly, which is not usually a concern for derivatives traders.

Any recovery depends on stabilizing macroeconomic data

According to derivatives and trading indicators, investors are less inclined to downgrade their positions at current levels, as evidenced by the modest improvement in Tether premium.

The positive funding rate for Bitcoin and Ether futures shows the increasing appetite of traders for leveraged long positions as the total crypto capitalization drops below $1.2 trillion.

Unless traditional markets and the macroeconomic scenario deteriorate, there is reason to believe crypto investors are expecting positive price action soon.

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

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