2 calculations signal that the $1.1T crypto market cap resistance will hold
Cryptocurrencies have failed to break the $1.1 trillion market cap resistance, which has held strong for the past 54 days. The two leading coins held back the market as Bitcoin (BTC) lost 2.5% and Ether (ETH) retreated 1% over the past seven days, but a handful of altcoins presented a robust rally.
The crypto markets’ combined capitalization fell 1% to $1.07 trillion between July 29 and August 5. The market was negatively impacted by reports on August 4 that the US Securities and Exchange Commission (SEC) is investigating every US crypto exchange after the regulator accused a former Coinbase employee of insider trading.
While the two leading cryptoassets were unable to post weekly gains, traders’ appetite for altcoins was not affected. Investors were positively influenced by the Coinbase exchange partnership with BlackRock, the world’s largest financial manager, responsible for investments worth $10 trillion.
Coinbase Prime, the service offered to BlackRock’s clients, is an institutional trading solution that provides trading, custody, funding and staking on over 300 digital assets. Comparing winners and losers among the top 80 coins therefore yields skewed results, as 10 of these have gained 12% or more over the past seven days:
FLOW surged 48% after Instagram announced support for the Flow blockchain via Dapper Wallet. The social network controlled by Meta (formerly Facebook) extends non-functional token integration.
Filecoin (FIL) gained 38% after the v16 Skyr upgrade on August 2, which hardened the protocol to avoid vulnerabilities.
VeChain (VET) gained 16.5% after some news sources falsely announced an Amazon Web Services (AWS) partnership. VeChain Foundation explained that the AWS reference was first cited in a May 9 case study.
Tether premium was somewhat worse
The OKX Tether (USDT) premium is a good gauge of China-based crypto trading demand. It measures the difference between China-based peer-to-peer trades and the US dollar.
Excessive buying demand tends to push the indicator above fair value of 100%, and during bearish markets, Tether’s market supply is flooded, resulting in a discount of 4% or more.
Currently, the Tether premium stands at 98.4%, the lowest level since June 10. Although far from retail panic selling, the indicator showed a modest deterioration over the past week.
Weaker retail demand is not a concern, however, as it partly reflects the fact that total cryptocurrency capitalization is down 69% year-to-date.
The futures markets show mixed sentiment
Perpetual contracts, also known as inverse swaps, have a built-in rate that is usually charged every eight hours. Exchanges use this fee to avoid imbalances in currency risk.
A positive funding rate indicates that longs (buyers) require more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to become negative.
As shown above, the cumulative seven-day funding rate is either slightly positive or neutral for the major cryptocurrencies by open interest. Such data indicate a balanced demand between leverage longs (buyers) and shorts (sellers).
Considering the absence of Tether demand in Asia and mixed perpetual contract premiums, there is a lack of confidence from traders as the total crypto capitalization struggles with the $1.1 trillion resistance. So for now, bears seem to have the upper hand considering the uncertainty caused by the SEC pressing charges against a former Coinbase CEO.
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