According to recent reports, the absence of transparency and regulatory ambiguity surrounding stablecoins has led to a decline in the cryptocurrency market, reaching its lowest point in three months with a total market capitalization of $1.02 trillion on June 15. Despite this, there is a glimmer of hope for investors as the derivatives market has demonstrated resilience and end-of-week price gains amidst the uncertainty surrounding stablecoin reserves. However, it is important to exercise
Over the past few weeks, there has been a decline in market sentiment caused by regulatory ambiguity. Notably, Bitcoin BTC $26,397 and BNB $243 experienced a 2.5% increase last week. However, XRP $0.49 recorded a 5.2% decrease, and Ether $1,721 traded down 0.7%.
It is important to observe that the 10-week pattern has repeatedly tested the support level, implying that it will be challenging for bulls to overcome the current bearish trend. This is especially true as regulatory conditions have deteriorated globally.
To begin with, Bakkt, a derivatives exchange based in New York, has made the decision to delist Solana $15, Polygon MATIC $0.6000, and Cardano ADA $0.262 due to recent regulatory changes in the United States. This move comes after the Securities and Exchange Commission (SEC) filed lawsuits against crypto exchanges Binance and oinbase">Coinbase last week.
In more recent news, Binance has been under preliminary investigation in France since February 2022. The France-based division of the cryptocurrency exchange has allegedly provided its services to French customers without obtaining an operating license, which is illegal. Additionally, regulators have found that the exchange has not implemented Know-Your-Customer procedures.
On June 16, Binance made an announcement that it would be leaving the Netherlands market and urged users to withdraw their funds promptly. The decision to exit the Dutch market was made after the exchange was unable to obtain a virtual asset service provider (VASP) license.
Despite the increasingly stringent regulatory climate surrounding cryptocurrencies, two derivatives metrics suggest that bulls have not yet conceded defeat. However, they are likely to face significant obstacles in attempting to reverse the current bearish trend.
The derivatives market reveals a relatively even demand for BTC and ETH leverage.
Perpetual contracts, which are alternatively referred to as inverse swaps, encompass an inherent rate that is typically levied every eight hours.
In financial markets, a positive funding rate reflects an increase in the demand for leverage by longs or buyers. Conversely, a negative funding rate results from an increase in the need for leverage by shorts or sellers.
The current seven-day funding rate for BTC and ETH is impartial, reflecting an equilibrium in the demand for leverage from both longs or buyers and shorts or sellers who utilize perpetual futures contracts. However, BNB stands out as an anomaly, with traders being charged up to 1% weekly for short bets. This can be attributed to the heightened risks arising from regulatory scrutiny of the Binance exchange.
The premium of USDT is negatively impacted by the Fear, Uncertainty, and Doubt (FUD) surrounding Tether.
The $1.00 premium of Tether USDT is a reliable indicator of the level of demand among retail traders of cryptocurrencies in China. This premium is calculated by comparing the value of peer-to-peer trades in China with that of
It can be stated that when there is an excessive demand for buying, it tends to exert pressure on the indicator causing it to exceed its fair value and reach 100%. Similarly, during bearish markets, there is an increase in the supply of Tether in the market, leading to a situation where the market is flooded with Tether offers resulting in a discount of 2% or more.
According to recent market data, the premium of Tether in Asian markets has decreased to 99.2% after remaining stable since June 6. This decline suggests a level of unease among investors. The reason for this could potentially be linked to reports released on June 16 regarding Tether’s reserves and their potential exposure to Chinese debt markets.
Potential Market Triggers
Metrics related to derivatives have demonstrated resilience in light of the robust regulatory measures implemented on cryptocurrency exchanges. As a result, it remains to be seen whether bears will be able to exert their influence and cause cryptocurrency to drop below the $1 trillion threshold.
Although there has been a recent rebound from the support level, it is anticipated that any increase in capitalization beyond $1.12 trillion (representing a 10% rise from the $1.02 trillion low) is unlikely to be sustained in the coming months.
Consequently, as the Bitcoin halving event is still more than 300 days away, those in favor of bullish market trends are placing their expectations on the possibility of a Bitcoin ETF approval and/or a Federal Reserve rate reduction to act as potential catalysts for a bullish market.
#Cryptocurrency # Investors #Derivatives
