The total crypto market capitalization has been trading in a downward channel for the past 29 days and is currently showing support at $1.17 trillion. Over the past 7 days, Bitcoin (BTC) posted a modest 2% drop while Ether (ETH) faced a 5% correction.

Total capitalization of the cryptocurrency market, billion US dollars. Source: Trading View
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The June 10 Consumer Price Index (CPI) report showed an 8.6% year-on-year increase, and crypto and stock markets felt the impact immediately, but it’s unclear if this figure will convince the US Federal Reserve to hesitate about future interest rate hikes. . .

Mid-Cap Altcoins Fall Even More, Sentiment Still Bearish

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The general bearish sentiment fueled by weak macroeconomic data and uncertainty over the Federal Reserve’s ability to curb inflation has had a major impact on the cryptocurrency markets.

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The fear and greed index hit 11/100 on June 9, and the data-driven sentiment indicator has been below 20 since May 8.

Cryptocurrency index of fear and greed. Source: www.alternative.me

This constant “extreme fear” value indicates that investors are worried, but at the same time, presumably provides a buying opportunity.

Below are the winners and losers from the last seven days. While the top two cryptocurrencies suffered modest losses, several mid-cap altcoins were down 14% or more.

Weekly winners and losers among the top 80 coins. Source: Nomix

The Helium Community (HNT) has endorsed the HIP-51 proposal, covering the economic and technical constructs needed to support new users, devices, and different types of networks, including cellular, VPN, and WiFi.

Chainlink (LINK) is up 22% after developers released an updated Chainlink 2.0 roadmap that includes native token staking.

Theta (THETA) token rose 9.7% as the network announced support for live streaming using API technology, which provides instant and easy connection to apps and websites.

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

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

The OKX Tether (USDT) premium is a good indication of the demand of retail crypto traders in China. It measures the difference between peer-to-peer (P2P) transactions in China and the US dollar.

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

Tether (USDT) P2P vs. USD/CNY. Source: OKH

On May 31, the price of Tether in Asian peer-to-peer markets dropped to 4%, indicating intense retail selling pressure. Curiously, on June 10 the situation improved after the indicator moved to a discount of 1.5%. Although the indicator remains negative, the indicator shows the willingness of investors to buy the dip as the total capitalization of the cryptocurrency has fallen below $1.2 trillion.

To exclude external factors specific to the Tether instrument, traders should also analyze the cryptocurrency futures markets. Perpetual contracts, also known as reverse swaps, have an embedded rate that is typically charged every eight hours. Exchanges use this fee to avoid currency risk imbalance.

A positive funding rate indicates that longs (buyers) require more leverage. However, the reverse situation occurs when shorts (sellers) require additional leverage, as a result of which the funding rate becomes negative.

The cumulative funding rate of perpetual futures on June 10th. Source: Coinglass.

The perpetual contracts reflected mixed sentiment after Bitcoin and Ethereum maintained a slightly positive (bullish) funding rate, but altcoin rates were negative. For example, a negative weekly BNB rate of 0.20% equates to 0.8% per month, which is usually not a concern for derivatives traders.

Any recovery depends on the stabilization of macroeconomic data

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

The positive funding rate for Bitcoin and Ethereum futures is indicative of a growing appetite among traders for leveraged long positions as total crypto capitalization has fallen below $1.2 trillion.

If traditional markets and the macroeconomic scenario do not worsen, there is reason to believe that crypto investors expect a positive price movement soon.

The views and opinions expressed here are solely those of author and do not necessarily represent the views of Cryptooshala. Every investment and trading move involves risk. You should do your own research when making a decision.