Crypto market cap retakes $1T, and derivatives point to further upside

The total crypto market capitalization increased by 26% in seven days, reaching $1.16 trillion on March 17. Bitcoin (BTC) was the biggest gainer among the top 20 coins, up 31.5%, although some altcoins gained 50% or more during the period.

The rise in cryptocurrency prices occurred when the US central bank was forced to lend the banks $300 billion in emergency funds. According to PBS NewsHour, nearly half of the money went to failed financial institutions Silicon Valley Bank and Signature Bank and was used to pay uninsured depositors. The remaining $153 billion was obtained through a long-running program known as the “discount window,” which allows banks to lend funds for up to 90 days.

Although it appears to protect the banking sector, additional funding to the Federal Deposit Insurance Corporation and credit facilitation using Fed resources ultimately creates a “false sense of confidence.” following activist billionaire investor Bill Ackman.

The $30 billion plan developed by U.S. regulators to avoid a major liquidity crisis at First Republic Bank “raised more questions than it answers,” said Ackman, who manages hedge fund Pershing Square. Furthermore, Ackman stated that “half measures do not work when there is a crisis of confidence.”

Billionaire Warren Buffett is on the losing end of the bet

As the banking crisis worsened, Warren Buffett, co-founder and largest shareholder of Berkshire Hathaway – a $650 billion financial conglomerate – saw his holdings rapidly deteriorate. Berkshire Hathaway, for example, is the largest owner of Bank of America shares, which have fallen 15.5% so far this year. This position alone has cost Buffett’s investment vehicle $5.2 billion.

Buffett, a noted cryptocurrency critic, has stated that he has no interest in Bitcoin, even though the entire float is offered at $1,300. The 91-year-old, with a net worth of around $102 billion, claimed that Bitcoin produces nothing, while farmland and residential real estate do.

However, Bitcoin’s price rose 31.5% in the six months to March 17, while Berkshire’s shares rose 5.8%. So for now, the so-called “rat poison” — as Buffett once described Bitcoin — is outperforming its own financial management firm.

Support for the $1 trillion market cap was quickly restored

Let’s look at the performance of the top 80 cryptocurrencies by market cap to see if the rise above $1 trillion has boosted the confidence of altcoin investors.

Conflux’s CFX gained 97.6% after KuCoin Ventures announced a $10 million investment in stablecoin issuer and blockchain-based payment service provider CNHC, which is available on the Ethereum and Conflux networks.

Stacks’ STX (STX) surged 75.7% as the network is scheduled to undergo an upgrade on March 20, introducing Stacks 2.1, with new features and improvements.

Immutable X’s IMX rose 71.7% after a long-awaited announcement of an upcoming partnership reveal scheduled for March 20.

Options traders are extremely confident about market conditions

Traders can gauge market sentiment by gauging whether more activity is going through call (buy) options or put (sell) options. Generally speaking, call options are used for bullish strategies, while put options are for bearish strategies.

A put-to-call ratio of 0.70 indicates that open interest for put options lags behind the larger number of call options. Conversely, a 1.40 indicator favors put options, which is a bearish sign.

Related: Crypto Biz — SVB collapses, USDC depegs, Bitcoin still up

Since March 12, demand for neutral-to-bullish call options has increased, indicating the increasing risk appetite of derivatives traders. The move peaked on March 17, when the volume of call options exceeded the volume of protective put options by a ratio of 3:1.

The gap favoring call options has stabilized at 2:1, indicating that professional investors are unconcerned after rejecting the $1.16 trillion market cap level on March 17. Ultimately, data indicates strong conviction for Bitcoin’s $26,000 support, so bulls are in a stronger position to continue their rally.

The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.