Značka: OKX

Pro traders adopt a hands-off approach as Bitcoin price explores new lows

Bitcoin’s (BTC) current 20% drop over the past four days has put the price at its lowest level in nine months and while these movements might seem extraordinary, quite a number of large listed companies and commodities faced a similar correction. For example, natural gas futures corrected 15.5% in four days and nickel futures traded down 8% on May 9.Other casualties of the correction include multiple $10 billion and higher market capitalization companies that are listed at U.S. stock exchanges. Bill.com (BILL) traded down 30%, while Cloudflare (NET) presented a 25.4% price correction. Dish Network (DISH) also faced a 25.1% drop and Ubiquiti’s (UI) price declined by 20.4%.Persistent weak economic data indicates that a recession is coming our way. At the same time, the U.S. Federal Reserve reverted its expansionary incentives and now aims to reduce its balance sheet by $1 trillion. On May 5, Germany also reported factory orders declining by 4.7% versus the previous month. The U.S. unit labor costs presented an 11.6% increase on the same day.This bearish macroeconomic scenario can partially explain why Bitcoin and risk assets continue to correct but taking a closer look at how professional traders are positioned can also provide useful insight.Bitcoin’s futures premium stabilized at 2.5%To understand whether the recent price action reflects top traders’ sentiment, one should analyze Bitcoin’s futures contracts premium, otherwise known as the “basis rate.”Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges. The three-month futures contract trades at a 5% or lower annualized premium whenever these pro traders flip bearish.On the other hand, a neutral market should present a 5% to 12% basis rate, reflecting market participants’ unwillingness to lock in Bitcoin for cheap until the trade settles.Bitcoin 3-month futures premium. Source: laevitas.chThe above data shows that Bitcoin’s futures premium has been lower than 5% since April 6, indicating that futures market participants are reluctant to open leverage long positions.Even with the above data, the recent 20% price correction was not enough to drive this metric below the 2% threshold, which should be interpreted as positive. Bulls certainly do not have a reason to celebrate, but there are no signs of panic selling from the viewpoint of futures markets.Options traders stepped deeper into the “fear” zoneTo exclude externalities specific to the futures contracts, traders should also analyze the options markets. The most simple and effective metric is the 25% delta skew, which compares equivalent call (buy) and put (sell) options. In short, the indicator will turn positive when “fear” is prevalent because the protective put options premium is higher than the call (bullish) options. On the other hand, a negative 25% skew indicates bullish markets. Lastly, readings between negative 8% and positive 8% are usually deemed neutral.Deribit Bitcoin 30-day options 25% delta skew. Source: laevitas.chThe above chart shows that Bitcoin option traders have been signaling “fear” since April 8 after BTC broke below $42,500. Unlike futures markets, options primary sentiment metric showed a worsening condition over the past four days as the 25% delta skew currently stands at 14.5%.To put things in perspective, the last time this options market’s “fear & greed” indicator touched 15% was on January 28, after Bitcoin price traded down 23.5% in four days.The bullish sentiment of margin markets peakedTraders should also analyze margin markets. Borrowing crypto allows investors to leverage their trading position and potentially increase their returns. For example, a trader can borrow Tether (USDT) and use the proceeds to boost their Bitcoin exposure.On the other hand, borrowing Bitcoin allows one to bet on its price decline. However, the balance between margin longs and shorts is not always matched.OKEx USDT/BTC margin lending ratio. Source: OKExData shows that traders have been borrowing more Bitcoin recently, as the ratio declined from 24.5 on May 6 to the current 16.8. The higher the indicator, the more confident professional traders are with Bitcoin’s price.Despite some recent Bitcoin borrowing activity aimed at betting on the price downturn, margin traders remain mostly optimistic, according to the USDT/BTC lending ratio. Typically, numbers above five reflect bullishness and the recent 24.5 peak was the highest level in more than six months.According to derivatives metrics, Bitcoin traders are afraid of a deepening correction as macroeconomic indicators deteriorate. However, investors also expect a potential crisis in traditional markets, so Bitcoin’s 20% correction merely follows that of broader risk assets.On a positive note, there are no signs of leverage short (negative) bets using margin or futures, meaning there is little conviction from sellers at current price levels.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Any dip buyers left? Bulls are largely absent as the total crypto market cap drops to $1.65T

The total crypto market capitalization has been trading within a descending channel for 24 days and the $1.65 trillion support was retested on May 6. The drop to $1.65 trillion was followed by Bitcoin (BTC) reaching $35,550, its lowest price in 70 days.Total crypto market cap, USD billion. Source: TradingViewIn terms of performance, the aggregate market capitalization of all cryptocurrencies dropped 6% over the past seven days, but this modest correction in the overall market does not represent some mid-capitalization altcoins which managed to lose 19% or more in the same time frame.As expected, altcoins suffered the mostIn the last seven days, Bitcoin price dropped 6% and Ether (ETH) declined by 3.5%. Meanwhile, altcoins experienced what can only be described as a bloodbath. Below are the top gainers and losers among the 80 largest cryptocurrencies by market capitalization.Weekly winners and losers among the top 80 coins. Source: NomicsTron (TRX) rallied 26.9% after TRON DAO rolled out a USDD, a decentralized stablecoin, on May 5. The algorithmic stablecoin is connected to the Ethereum and BNB Chain through the BTTC cross-chain protocol.1inch (1INCH) gained 5.6% after the decentralized exchange governance application became Polygon’s network leader by completing 6 million swaps on the network.STEPN (GMT), the native token of the popular move-to-earn lifestyle app, declined 35.7%, adjusting after a 70% rally between April 18 and April 28. A similar movement happened to Apecoin (APE) after the token pumped 94% between April 22 and April 28.The Tether premium flipped negative on May 6The OKX Tether (USDT) premium gauges China-based retail demand and it measures the difference between the China-based peer-to-peer trades and the United States dollar.Excessive buying demand puts the indicator above fair value at 100%. On the other hand, Tether’s market offer is flooded during bearish markets, causing a 4% or higher discount.Tether (USDT) peer-to-peer vs. USD/CNY. Source: OKXThe OKX Tether premium peaked at 1.7% on April 30, indicating some excess demand from retail. However, the metric reverted to a 0% premium over the next 5 days.More recently, in the early hours of May 6, the OKX Tether premium flipped to -1% negative. Data shows retail sentiment worsened as Bitcoin moved below $37,000.Futures markets show mixed sentimentPerpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.Accumulated 7-day perpetual futures funding rate. Source: CoinglassAs shown above, the accumulated seven-day funding rate is slightly positive for Bitcoin and Ether. Data indicates slightly higher demand from longs (buyers), but nothing that would force traders to close their positions. For instance, a positive 0.15% weekly rate equals 0.6% per month, thus unlikely to cause harm.On the other hand, altcoins’ 7-day perpetual futures funding rate was -0.30%. This rate is equivalent to 1.2% per month and indicates higher demand from shorts (sellers).Signs of weak retail demand as indicated by OKX Tether data and the negative funding rate on altcoins are a signal that traders are unwilling to buy at the critical $1.65 trillion crypto market capitalization. Buyers seem to be waiting for further dips before stepping in, so further price corrections will likely follow.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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3 reasons why Bitcoin price is clinging to $38,000

Bitcoin (BTC) has been unable to break from the 26-day-long descending channel. Investors are uncomfortable holding volatile assets after the United States Federal Reserve pledged to reduce its $9 trillion balance sheet.While inflation has been surging worldwide, the first signs of an economic downturn showed as the United Kingdom’s retail sales fell 1.4% in March. Moreover, Japan’s industrial production dropped 1.7% in March. Lastly, the U.S. gross domestic product fell 1.4% in the first quarter of 2022.Bitcoin/USD price at FTX. Source: TradingViewThis bearish macroeconomic scenario can partially explain why Bitcoin has been on a downtrend since early April. Still, one needs to analyze how professional traders position themselves, and derivatives markets tprovide some excellent indicators.The Bitcoin futures premium is mutedTo understand whether the current bearish trend reflects top traders’ sentiment, one should analyze Bitcoin’s futures contracts premium, which is also known as a “basis.” Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges. A bearish market sentiment causes the three-month futures contract to trade at a 5% or lower annualized premium (basis).On the other hand, a neutral market should present a 5% to 12% basis, reflecting market participants’ unwillingness to lock in Bitcoin for cheap until the trade settles.Bitcoin 3-month futures premium. Source: laevitas.chThe above chart shows that Bitcoin’s futures premium has been below 5% since April 6, indicating that futures market participants are reluctant to open leverage long (buy) positions.Options traders remain in the “fear” zoneTo exclude externalities specific to the futures instrument, traders should also analyze the options markets. The 25% delta skew compares equivalent call (buy) and put (sell) options. The indicator will turn positive when “fear” is prevalent because the protective put options premium is higher than the call options.The opposite holds when market makers are bullish, causing the 25% delta skew to shift to the negative area. Readings between negative 8% and positive 8% are usually deemed neutral.Deribit Bitcoin 30-day options 25% delta skew. Source: laevitas.chThe above chart shows that Bitcoin option traders have been signaling “fear” since April 8, just as BTC broke below $42,500 following a 10% drop in four days. Of course, such a metric could be reflecting the 16% negative BTC price performance over the past month, so not exactly a surprise.Margin markets sustain its optimismMargin trading allows investors to borrow cryptocurrency and leverage their trading position, thus potentially increasing returns. For example, a trader can buy cryptocurrencies by borrowing Tether (USDT) to increase their exposure.On the other hand, Bitcoin borrowers can only short the cryptocurrency as they bet on its price decline. Unlike futures contracts, the balance between margin longs and shorts isn’t always matched.OKEx USDT/BTC margin lending ratio. Source: OKExThe above chart shows that traders have been borrowing more Bitcoin recently, as the ratio decreased from 20 on April 30 to the current 12.5. The higher the indicator, the more confident professional traders are with Bitcoin’s price.Despite some additional Bitcoin borrowing activity aimed at betting on the price downturn, margin traders remain mostly optimistic, according to the USDT/BTC lending ratio.Bitcoin traders fear further correction as macroeconomic indicators deteriorate because investors expect a potential crisis impact on riskier markets. However, there are no signs of leverage short (negative) bets using margin or futures, meaning sellers lack conviction at $38,000.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Bitcoin price surges, but derivatives metrics reflect pro trader’s neutral sentiment

As Bitcoin (BTC) finally broke out of the $46,000 resistance on March 27, traders were quick to conclude that the bearish trend was gone for good. Even as the price hit its highest level in 84 days, derivatives metrics and Asia’s Tether premium still show a lack of bullish sentiment.While analysts will struggle to find a rationale for the modest 5.8% 24-hour gain that pushed Bitcoin above $48,500, we still have to account for the daily 3.8% average volatility. For instance, over the past 12 months, BTC presented a daily swing higher than 5.8% in 44 instances, ranging from a negative 14.4% on May 19, to a 14.6% price increase on Feb. 28.Bitcoin’s rally caused the broader crypto market capitalization to hike 15.3% over the past week, reaching $2.2 trillion. Curiously, Bitcoin gained 15.7% and Ether (ETH) 15.8%, pretty much in line with the altcoin’s average.Still, they were no match for the altcoin rally that followed. Below are the top gainers and losers among the 80 largest cryptocurrencies by market capitalization.Weekly winners and losers among the top-80 coins. Source: NomicsZilliqa (ZIL) announced a partnership with payments infrastructure provider Ramp, and is expected to release its metaverse project called Metapolis which will be built on unreal gaming engine, the same 3D technology behind Fortnite and PlayerUnkown’s Battlegrounds, or PUBG.Loopring (LRC) price surged by 51% after GameStop’s upcoming NFT marketplace integrated the Loopring network on March 23 and Axie Infinity (AXS) rallied 41% as the team outlined plans to progressively give control over the project’s treasury and governance control. Axie is also expected to launch the Origin game over the next couple of weeks, which includes a reimagined storyline and the addition of active cards for eye and ear body parts.Tether premium indicates weak retail demandThe OKX Tether (USDT) premium is a good gauge of China-based retail trader demand for crypto. It measures the difference between China-based USDT peer-to-peer trades and the official U.S. dollar currency.Excessive buying demand tends to pressure the indicator above fair value, which is 100%. On the other hand, Tether‘s market offer is flooded during bearish markets, causing a 4% or higher discount.Tether (USDT) peer-to-peer vs. USD/CNY. Source: OKXCurrently, the Tether premium stands at 99.9%, which is neutral. Thus, data shows retail demand is not picking up despite the price improvement, which is odd considering that the total cryptocurrency capitalization jumped 15.3%.Funding rates show undecided tradersPerpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Perpetual futures are retail traders‘ preferred derivatives because their price tends to track regular spot markets perfectly.Exchanges use this fee to avoid exchange risk imbalances. A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.Weekly winners and losers among the top-80 coins. Source: NomicsNotice how the accumulated seven-day funding rate is uneventful in most cases. This data indicates a balanced leverage demand between longs (buyers) and sellers (shorts).For example, Solana’s (SOL) positive 0.20% weekly rate equals 0.8% per month, which is not a burden for traders building futures positions. Typically, when there‘s an imbalance caused by excessive optimism, that rate can easily surpass 5% per month.Some might say that the Bitcoin price hike above $47,000 was the nail in the coffin for the bears because the cryptocurrency displayed strength during global macroeconomic uncertainty.At the moment, there are no signs of bullishness from Asian retail traders, as measured by the CNY Tether premium and there is no indication of pressure from leverage longs (buyers) on futures markets. Therefore, the overall crypto market sentiment is neutral.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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$43K BTC flipping support? Not anytime soon, according to derivative metrics

Bitcoin (BTC) showed strength on March 22, posting a 5% gain and testing the $43,000 resistance. The move liquidated over $150 million worth of leverage short positions, those betting on a declining price using futures contracts.Some Twitter analysts attribute the price improvement to the Do Kwon, the co-founder of blockchain protocol Terra. During a recent Twitter Spaces conversation with analyst Udi Wertheimer, Kwon revealed his plans to back the TerraUSD stablecoin with Bitcoin. Terra’s co-founder said “the current clip that we have to buy Bitcoin is about $3 billion and will add to that,” causing markets to get agitated on March 21 when some observers attributed a $125 million Tether (USDT) transaction to Kwon. Margin traders are still going longMargin trading allows investors to borrow cryptocurrency to leverage their trading position, increasing returns. For example, one can buy cryptocurrencies by borrowing Tether and increasing their exposure. On the other hand, Bitcoin borrowers can only short the cryptocurrency as they bet on its price declining. Unlike futures contracts, the balance between margin longs and shorts isn’t always matched.OKEx USDT/BTC margin lending ratio. Source: OKExThe above chart shows that traders have been borrowing more BTC recently, as the ratio decreased from 15 on March 20 to the current 7.5. Even though the data remains bullish as the indicator favors stablecoin borrowing, it reached the lowest level since March 9. Considering crypto traders are usually bullish, a margin lending ratio below 3 is deemed unfavorable. Thus, the current level remains positive, just less confident than two days ago.Option markets did not shift recentlyCurrently, it’s somewhat difficult to discern a direction in the market. Still, the 25% delta skew is a telling sign whenever arbitrage desks and market makers overcharge for upside or downside protection. The 25% delta skew compares similar call (buy) and put (sell) options. The metric will turn positive when fear is prevalent because the protective put options premium is higher than similar risk call options.The skew indicator will move above 8% if traders fear a Bitcoin price crash. On the other hand, generalized excitement reflects a negative 8% skew.Bitcoin 30-day options show 25% delta skew: Source: Laevitas.chAs displayed above, we exited the 8% “fear” mode on March 9 and entered a neutral area since then. Still, Tuesday’s 5% rally was not enough to shift the options skew to a neutral-to-bullish zone. Related: Bitcoin hash rate may see ‘small capitulation’ with difficulty set for new all-time highDespite the not-so-positive indicator from Bitcoin options, these arbitrage desks and market makers will be forced to reverse bearish positions once the price breaks $45,000 and changes the current trend. The OKX margin lending rate showed pro traders reducing their bullish bets after a 13% BTC price rally in 10 days, so derivatives data provides a slightly bearish view. For this reason, expecting a pump above $43,000 right now seems a bit too optimistic.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Bitcoin rally hopes diminish as pro traders flip bearish, retail interest at 12-month lows

Bitcoin (BTC) has been trapped in a symmetrical triangle for 56 days and the trend change could last until early May, according to price technicals. Currently, the support level stands at $38,000, while the triangle resistance for daily close stands at $43,600.Bitcoin mining up, retail interest downBitcoin/USD price at FTX. Source: TradingViewThe week started with a positive achievement for the Bitcoin network as the Lightning Network capacity reached a record-high 3,500 BTC. This solution allows extremely cheap and instant transactions on a secondary layer, known as off-chain processing.After cryptocurrency mining activities were banned in China in 2021, publicly-listed companies in the United States and Canada attracted most of this processing power. As a result, Bitcoin’s hash has recovered dramatically since the summer. It’s currently at all-time highs at over 200 EH/s. According to the Cambridge Bitcoin electricity consumption index, 45% of the global hash rate derives from North America. Furthermore, Whit Gibbs, the founder and CEO of Compass Mining, stated that “public mining companies definitely have an advantage when it comes to holding Bitcoin because they have access to the capital markets.” In addition, there is less selling pressure as miners’ reserves have been steadily increasing.Global search for the “Bitcoin” term. Source: Google TrendsMeanwhile, searches for “Bitcoin” on Google are nearing their lowest levels in 12 months. This indicator could partially explain why Bitcoin is 41% below its $69,000 all-time high, i.e., public interest is low. Still, one needs to analyze how professional traders are positioning themselves, and there’s no better gauge than derivatives markets.Related: Crypto miner Hut 8 posts record revenue as BTC holdings surge 100%Long-to-short data confirms lack of excitementThe top traders’ long-to-short net ratio excludes externalities that might have impacted specific derivatives instruments. By analyzing these top clients’ positions on the spot, perpetual and futures contracts, one can better understand whether professional traders are leaning bullish or bearish.There are occasional methodological discrepancies between different exchanges, so viewers should monitor changes instead of absolute figures.Exhanges’ top traders Bitcoin long-to-short ratio. Source: CoinglassBitcoin might have jumped 8% since March 13, but professional traders did not increase their bullish bets according to the long-to-short indicator. For instance, Huobi’s top traders’ ratio slightly decreased from 1.10 to the current 1.06 level. Moreover, OKX data shows those traders reducing their longs from 1.26 to 1.03 significantly reducing their longs. Binance was the only exception, as top traders increased their longs from 1.05 to 1.13. Still, there has been a slight 0.06 decrease across the three major exchanges on average.Can the triangle break to the upside?From the perspective of the metrics discussed above, there is hardly any sense that Bitcoin price will flip bullish in the short-term. Data suggests that pro traders have reduced their long positions, as expressed by the basis rate and long-to-short ratio.Moreover, the broader Google search trend signals retail interest is not picking up despite high inflation data and global socio-political uncertainties. For now, the odds of the symmetrical triangle breaking for the upside seem dim.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Manchester footballing rivalries commence in field of Web3

Leading English football club Manchester City have announced an inaugural cryptocurrency exchange partnership with OKX across both its men’s and women’s teams, as well as the clubs emerging e-sports ventures.According to the club’s press release, the collaboration will focus on “exclusive experiences for OKX’s global customer base, in addition to an in-stadium presence across the Etihad Stadium and Academy Stadium.”Rebranded from OKEx in mid-January this year, OKX — a Seychelles-based corporation with reportedly over 20 million customers — is the second largest spot exchange in the industry, facilitating over $4.3 billion in normalized trading volume over the past twenty-four hours. This total places them ahead Coinbase in third at approximately $3.3 billion, but someway behind Binance’s dominance at the top of the table with over $16.2 billion.CEO of OKX, Jay Hao, noted that “Manchester City is a Club that represents the effect football has to make a positive difference in people’s lives, to bring people together around a shared love of the beautiful game.”Welcome to @okx, Official Cryptocurrency Partner of Manchester City.Game On! — Manchester City (@ManCity) March 4, 2022Related: Penalties and extra time: The scoreboard for soccer club crypto dealsAmid an ever-present rivalry, and fierce jostle for bragging rights in the city of Manchester — especially in light of the upcoming derby match this Sunday — both club’s commercial sides are taking considerable strides in the digital asset space, respectively scoring lucrative deals with industry firms, and racing to expand their influence in the Web3 sphere.Manchester United preceded their counterparts after teaming up with blockchain firm Tezos in early February to become their new official training kit and technology partner, including plans to enter the metaverse, tokenomic, and nonfungible token, or NFT, collectible space.In April 2021, Forbes published the latest statistics ranking the world’s most valuable football clubs. While Spanish-giants Barcelona and Real Madrid took the top spots, Manchester United came in fourth with a value of $4.2 billion and a revenue across 2020 of $643 million. Meanwhile, Manchester City came in sixth place at $4 billion and $609 million, respectively. Similarly, fellow Premier League North-London based club, Arsenal attempted to enter the fan-token market, only to be halted in their endeavours by Advertising Standards Authority, or ASA, for breaching rules, and according to the regulatory body: “irresponsibly taking advantage of consumers’ inexperience and for failing to illustrate the risk of the investment.”

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2 key derivatives metrics signal that Bitcoin traders expect BTC to hold $40K

Whenever Bitcoin (BTC) fails to break through important resistance levels, traders gain confidence and add to their altcoin positions. The logic is that, unless BTC drops significantly, these movements historically provide decent rewards for those shifting their portfolios toward higher risk.Bitcoin/USD at FTX. Source: TradingViewIn the past seven days, the aggregate market capitalization performance of the cryptocurrency market showed a modest 3% increase to $1.78 trillion. This number is roughly in line with the performance seen from Bitcoin, Ether (ETH) and BNB.However, comparing the winners and losers among the top-80 coins provides skewed results. For instance, while the gainers captured a positive 24.9% move on average, the worst performers dropped by 5.9%.Weekly winners and losers among the top-80 coins. Source: NomicsTerra (LUNA) rallied 52% on the week after the nonprofit organization supporting the Terra blockchain ecosystem sold $1 billion worth of tokens on Feb. 22. Luna Foundation raised money from Three Arrows Capital and Jump Crypto, a trading group that earlier assisted Solana’s Wormhole cross-bridge platform by replenishing their stolen $300 million in Ether.On Feb. 21, WAVES gained 50.7% after announcing a partnership with Allbridge that makes the protocol cross-chain interoperable and supportive of the Ethereum Virtual Machine (EVM) and non-EVM chains like NEAR Protocol, Solana (SOL) and Terra (LUNA).Arweave (AR) rallied 28.5% in seven days after Bundlr Network released a high-volume Twitter archiver tool on Feb. 21. The system allows users to store tweets and linked media directly onto Arweave’s permanent storage.Lastly, QuickSwap, the Uniswap (UNI) implementation on the Polygon network, became the largest decentralized exchange DEX protocol by volume, reaching a $40 million daily average in February. Uniswap (UNI) token gained 14.4% over the past seven days, while Polygon (MATIC) rallied 8.5%.The Tether premium reflects low retail demandThe OKX Tether (USDT) premium is a good gauge of China-based retail trader crypto demand. It measures the difference between China-based peer-to-peer trades and the official U.S. dollar currency. Excessive buying demand tends to pressure the indicator above fair value at 100%, and during bearish markets, Tether’s market offer is flooded, causing a 4% or higher discount.Tether (USDT) peer-to-peer vs. USD/CNY. Source: OKXCurrently, the Tether premium stands at 100.3%, which is neutral. Still, there has been a consistent improvement in 2022. This data signals that retail demand is picking up, which is positive considering that the total cryptocurrency capitalization dropped 19% between Jan. 1 and Feb. 28.Futures markets confirm a lack of “euphoria”Perpetual contracts, also known as inverse swaps, have an embedded rate usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.Accumulated perpetual futures funding rate on Feb. 28. Source: CoinglassAs depicted above, the accumulated 7-day funding rate is slightly negative in most cases. This data indicates slightly higher demand from shorts (sellers), but it is insignificant. For example, Luna’s negative 0.65% weekly rate equals 2.8% per month, a figure th is not too concerning for futures traders.Had there been a relevant risk appetite from shorts, the rate would be above 1% per week or equivalent to 4.6% per month.Perpetual futures are retail traders’ preferred derivatives because their price tends to track regular spot markets perfectly. Therefore, despite the negative 19% crypto performance in 2022, the neutral Tether premium and the funding rate should be interpreted as positive.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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2 key indicators cast doubt on the strength of the current crypto market recovery

Analyzing the aggregate cryptocurrency market performance over the past 7 days could give investors the impression that the total market capitalization grew by a mere 4% to $2.03 trillion, but this data is heavily impacted by the top 5 coins, which happen to include two stablecoins.Excluding Bitcoin (BTC), Ether (ETH), Binance Coin (BNB) and stablecoins reflects a 9.3% market capitalization increase to $418 billion from $382 billion on Feb 4. This explains why so many of the top-80 altcoins hiked 25% or more while very few presented a negative performance.Winners and losers among the top-80 coins. Source: NomicsGala Games (GALA) announced on Feb. 9 a partnership with world renowned hip-hop star Snoop Dogg to launch his new album and exclusive non-fungible token (NFT) campaign. Gala Games also has plans to support additional content like access to films, comics, and more in the future.Theta Network (THETA), a decentralized video sharing platform, was fueled by a Theta Labs funding grant to Replay, a Web3 content payment and tracking protocol for content owners. According to the release, Replay’s end-to-end solution will allow Theta users to be fairly rewarded for their contributions. XRP also rallied after Ripple got permission for a ‘fair notice defense’ to the U.S. Securities and Exchange Commission (SEC). The decision refers to the ongoing court case in which the SEC claimed that Ripple sold XRP as illegal securities.On the other hand, the worst performers included decentralized storage protocols Arweave (AR) and Dfinity (ICP). Meanwhile, Cosmos (ATOM) saw the total value locked in the CosmosHub smart contract drop by 82% to $1.2 million. Lastly, Solana (SOL) continued to reflect the negative sentiment directly connected to the Wormhole token bridge smart contract that was exploited on Feb. 2. The $321 million wrapped Ethereum hack was the largest loss so far in 2022.Tether premium reflects low retail demandThe OKEx Tether (USDT) premium measures the difference between China-based peer-to-peer (P2P) trades and the official U.S. dollar currency. Excessive cryptocurrency retail demand tends to pressure the indicator above fair value, or 100%. On the other hand, bearish markets likely flood Tether’s market offer, causing a 4% or higher discount.Tether (USDT) peer-to-peer vs. USD/CNY. Source: OKXCurrently, the metric has a 99.5% reading, which is neutral, but the gap has been closing over the past 6 weeks. This signals that retail demand is picking up and is a positive reading considering that the total cryptocurrency capitalization remains 35% below the $3 trillion all-time high.Futures markets confirm the lack of “euphoria”Perpetual contracts, also known as inverse swaps, have an embedded rate usually charged every eight hours. Those measures are established to avoid exchange risk imbalances. A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, and this causes the funding rate to turn negative.Perpetual futures 8-hour funding rate on Feb. 11. Source: CoinglassAs depicted above, the eight-hour fee is either zero or slightly negative in most cases. This data indicates a balanced leverage demand from longs (buyers) and shorts (sellers). Had there been a relevant risk appetite from either side, the rate would be above 0.05%, equivalent to 1% per week.Perpetual futures are retail traders’ preferred derivatives because its price tends to track the regular spot markets. The Tether premium and the funding rate are neutral-to-bearish despite the 4% weekly gain, but one should factor in that cryptocurrencies have recently faced a 50% drawdown, meaning these indicators are somewhat skewed.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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2 key Bitcoin price metrics suggest BTC is primed to reclaim $40,000

Cryptocurrencies had a volatile week after Bitcoin’s (BTC) sudden crash to $33,000 on Jan. 24. However, the sharp 9% drop fully recovered within 8 hours after BTC price regained the $36,000 support.On Jan. 26, Bitcoin rallied to $38,960 but it could not sustain the level and corrected by 8.8% in the following 8 hours. When factoring in the recent ups and downs, Bitcoin managed to only gain a meager 1.6% over the past seven days.Even with the considerable price swings, the aggregate futures contracts liquidations were relatively low. Longs (buyers) had $570 million futures terminated, while shorts (sellers) faced $690 million. Data shows that Bitcoin futures represented 41% of the total $1.25 billion liquidations.Regulatory winds could be limiting BTC’s price recoveryThe total crypto market capitalization presented a modest 1.6% weekly increase, in line with Bitcoin’s performance.Total crypto market capitalization, USD billion. Source: TradingViewNotice how the Jan. 24 price is forming higher lows and currently shows support at $1.75 trillion. Even with the price being 22% down in 2022, the total crypto market capitalization showed a healthy 12.5% bounce since the Jan. 24 low.Investors seem to be digesting this week’s regulatory news where United States Congressman Ted Budd submitted an amendment to scrub a bill provision allowing the U.S. Treasury to unilaterally prohibit certain financial transactions without public input.If passed in its current form, the America COMPETES Act of 2022 would result in a significant blow to the cryptocurrency industry, as Coin Center’s executive director Jerry Brito stated.Investors were negatively impacted by news that the U.S. White House is reportedly preparing an executive order on crypto to make government agencies conduct risk analysis on cryptocurrency as a national security threat. Metaverse tokens decoupled after last week’s Apple newsSteady bearish newsflow might have been the cause for cryptocurrencies’ recent price action but there were some stellar performances from Metaverse tokens. Top weekly winners and losers on Jan. 31. Source: NomicsApple (AAPL) CEO, Tim Cook, said in an investors’ call on Jan. 27 that metaverse applications have a lot of potential and that his company is investing in augmented reality developments on its devices.The news was enough to catapult metaverse-related tokens by up to 36%, including Flow, The Sandbox (SAND), Decentraland (MANA), Enjin Coin (ENJ), and Arweare (AR).On the other hand, Terra (LUNA) was impacted after the Avalanche-based reserve currency Wonderland Money (TIME) announced that a pending proposal would determine whether the project closes up shop or not. As a result, the MIM stablecoin dipped below 1.00 and some speculate that this may have had a knock-on effect on Terra’s LUNA and UST token.Scalability and interoperability blockchain solutions Cosmos (ATOM), Fantom (FTM), and Harmony (ONE) presented negative performances after the Ethereum hash rate surpassed 1.11 PH/s, its highest level ever registered. A higher hash rate indicates that more miners are joining the network, which helps to cement blockchain security.Tether premium and CME futures showed improvementThe OKEx Tether (USDT) premium measures the difference between China-based peer-to-peer (P2P) trades and the official U.S. dollar. Figures above 100% indicate excessive demand for cryptocurrency investing. On the other hand, a 5% discount usually indicates heavy selling activity.OKEx USDT peer-to-peer premium vs. USD. Source: OKXThe Tether indicator continued to display strength as it stood above 99% over the past seven days. That is in stark contrast to three weeks ago when panic selling from China-based traders drove the indicator to a 4% discount.To confirm that the crypto market structure has improved, traders should analyze the CME’s Bitcoin futures contracts premium. This metric analyzes the difference between longer-term futures contracts to the current spot price in regular markets.Whenever this indicator fades or turns negative (backwardation), it suggests that there is bearish sentiment.BTC CME 2-month forward contract premium vs. Bitcoin/USD. Source: TradingViewThese fixed-month contracts usually trade at a slight premium, indicating that sellers request more money to withhold settlements for longer. As a result, futures should trade at a 0.5% to 2% premium in healthy markets, a situation known as contango.Notice how the indicator flirted with the backwardation from Jan. 18 to 24 as Bitcoin dipped below $42,000. However, as BTC showed signals that $33,000 could have been a local bottom, the futures markets recovered a healthy 0.5% premium.Considering that the aggregate cryptocurrency market capitalization is down 22% in 2022, the market structure looks primed for a recovery. Barring a significant change in these fundamentals, Bitcoin bulls are probably beginning to feel comfortable adding positions below $40,000.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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