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

Total cryptocurrency market cap has been trading in a descending channel for the past 29 days and is currently showing support at the $ 1.17 trillion level. Over the past 7 days, Bitcoin (BTC) has experienced a modest 2% decline and Ether (ETH) has undergone a 5% correction.

Total cryptocurrency market cap, billions of dollars. Source: TradingView

The June 10 Consumer Price Index (CPI) report showed an 8.6% year-over-year increase and the stock and crypto markets have been impacted, but it is uncertain whether the figure will convince the Federal Reserve US to hesitate in future interest rate hikes.

Mid cap altcoins have fallen further, sentiment is still bearish

The across-the-board bearish sentiment caused by weak macroeconomic data and uncertainties about the Federal Reserve’s ability to curb inflation has had a severe impact on cryptocurrency markets.

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

Index of fear and greed of cryptocurrencies. Source: alternative.me

This persistent reading of “extreme fear” indicates that investors are concerned but, at the same time, presumably presents a buying opportunity.

Below are the winners and losers of the past seven days. While the two major cryptocurrencies experienced modest losses, a handful of mid-cap altcoins fell by 14% or more.

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

The Helium Community (HNT) has approved the HIP-51 proposal, which covers the economic and technical constructions required to support new users, devices, and different types of networks, including cellular, VPN, and WiFi.

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

Theta Token (THETA) gained 9.7% when the network announced livestream support using API technology which enabled instant and easy connection to apps and websites.

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

The data shows that traders are less inclined to sell at current levels

The OKX Tether (USDT) premium is a good indicator of demand from China-based retail cryptocurrency traders. It measures the difference between China-based peer-to-peer (P2P) trading and the US dollar.

Excessive buying demand tends to put pressure on the indicator above 100% fair value and, during bear markets, Tether’s market supply gets swamped and causes a discount of 4% or more.

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

On May 31, Tether’s price in Asian peer-to-peer markets entered a 4% discount, signaling intense retail pressure. Curiously, the situation improved on June 10 after the indicator moved to a discount of 1.5%. Despite remaining negative, the metric shows investor willingness to buy the decline as total cryptocurrency capitalization fell below $ 1.2 trillion.

To rule out the specific externalities of the Tether instrument, traders must also analyze the futures markets on cryptocurrencies. Perpetual contracts, also known as reverse swaps, have a built-in fee that is usually charged every eight hours. Exchanges use this fee to avoid currency risk imbalances.

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 go negative.

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Funding rate of perpetual futures accumulated on 10 June. Source: Coinglass

Perpetual contracts reflected mixed feelings after Bitcoin and Ethereum had a slightly positive (bullish) funding rate, but altcoin rates were negative. For example, BNB’s negative 0.20% weekly rate is 0.8% per month, which is generally not a problem for derivatives traders.

Any recovery depends on the stabilization of macroeconomic data

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

The positive funding rate for Bitcoin and Ether futures shows traders’ growing appetite for leveraged long positions as total cryptocurrency capitalization fell below $ 1.2 trillion.

Unless traditional markets and the macroeconomic environment deteriorate, there is reason to believe that cryptocurrency investors are expecting a positive price movement soon.

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