The total cryptocurrency market capitalization has gained 2% in the past seven days, reaching $850 billion. Even with the positive move and ascending channel initiated on November 20, the overall sentiment remains bearish and year-to-date losses amount to 63.5%.
Bitcoin (BTC) price also only gained 2% on the week, but investors have little to celebrate as the current level of $16,800 represents a 64% decline since the start of the month. ‘year.
Bankrupt exchange FTX remained in the spotlight after the exchange hacker continued to move parts of the $477 million in stolen assets in an attempt to launder the money. On November 29, analysts alleged that some of the stolen funds were transferred to OKX.
The FTX saga has made politicians scream louder in their calls for regulation. On November 28, European Central Bank (ECB) President Christine Lagarde called crypto regulation and oversight an “absolute necessity.” US House Financial Services Committee Chair Maxine Waters announced that lawmakers will explore the collapse of FTX during an investigation on Dec. 13.
On Nov. 28, Kraken, a U.S.-based cryptocurrency exchange, agreed to pay more than $362,000 as part of an agreement “to settle its potential civil liability” related to the breach of sanctions against the ‘Iran. According to the United States Treasury Department’s Office of Foreign Assets Control, Kraken exported services to users who appeared to be in Iran when they transacted in virtual currency.
The 2% weekly gain in total market capitalization was mainly impacted by the 7% positive price movement of Ether (ETH). The bullish sentiment also had a significant impact on altcoins, with 6 of the top 80 coins gaining 10% or more over the period.
Fantom (FTM) gained 29.3% amid reports that the Fantom Foundation is generating consistent profits and has 30 years of trail without selling FTM tokens.
Dogecoin (DOGE) rose 26.8% as investors increasingly expected Elon Musk’s vision for Twitter 2.0 to include some form of DOGE integration.
ApeCoin (APE) gained 15.6% after the community-driven DAO of ApeCoin holders launched its own marketplace to buy and sell NFTs from the Yuga Labs ecosystem.
Chainlink (LINK) rose 11.1% ahead of the beta launch of its staking services on December 6, increasing opportunities for holder rewards.
Leverage demand is balanced between bulls and bears
Perpetual contracts, also known as reverse swaps, have an embedded rate typically charged every eight hours. Exchanges use these fees to avoid currency risk imbalances.
A positive funding rate indicates that longs (buyers) require more leverage. However, the opposite situation occurs when the shorts (shorts) require additional leverage, causing the funding rate to become negative.
The 7-day funding rate was close to zero for Bitcoin, Ether, and XRP, so the data points to balanced demand between longs (buyers) and shorts (sellers).
The only exception was BNB, which featured a weekly funding rate of 1.3% for those holding leveraged shorts. While not a burden on sellers, it reflects investors’ unease about buying BNB at current price levels.
Traders should also analyze options markets to understand whether whales and arbitrage desks have placed higher bets on bullish or bearish strategies.
The put/call option ratio shows a moderate uptrend
Traders can gauge overall market sentiment by measuring whether more activity is going through call options (buy) or put options (sell). Generally speaking, call options are used for bullish strategies, while put options are used for bearish strategies.
A put-call ratio of 0.70 indicates that the open interest of put options lags the most bullish calls by 30% and is therefore bullish. On the other hand, an indicator at 1.20 favors put options by 20%, which can be considered bearish.
Even though Bitcoin price failed to break through the $17,000 resistance on November 30, there was no excessive demand for downside protection using options. As a result, the put-to-call ratio remained stable at around 0.53. The Bitcoin options market remains more heavily populated with neutral to bearish strategies, as indicated by the current level favoring call (call) options.
Despite the weekly price rise on some altcoins and even the 7.1% gain in the price of Ether, there have been no signs of improving sentiment by derivatives metrics.
There is a balanced demand for leverage using futures, and the BTC options risk assessment metric did not improve even when Bitcoin price tested the $17,000 level.
Currently, the odds are in favor of those betting that the $870 billion market cap resistance will show strength, but a 5% negative move towards the $810 billion support is not enough to invalidate the ascending channel, which could give the bulls much-needed headroom to eradicate the contagion risks caused by FTX’s insolvency.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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.
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