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

The $46,000 resistance was broken by Bitcoin (BTC), on March 27th. Traders quickly concluded that the bearish trend had ended. Even though the price reached its highest point in 84 days on March 27, derivatives metrics and Asia’s Tether premium continue to show a lackluster bullish sentiment.

Analysts will be unable to explain the small 5.8% gain over 24 hours that drove Bitcoin to $48,500. However, it is important to account for daily volatility of 3.8%.

BTC has shown a daily swing greater than 5.8% in 44 cases over the past year. This includes a negative 14.4% price change on May 19 and a positive 14.6% price rise on February 28.

The rally in Bitcoin caused the wider crypto market capitalization (at $2.2 trillion) to rise 15.3% over the last week. Curiously, Bitcoin rose 15.7%, while Ether (ETH), 15.8%, which is in line with the average altcoin gain.

They were not able to withstand the altcoin rally. Here are the top losers and gainers of the 80 largest cryptocurrency markets by market capitalization.

Weekly winners and losers from the top-80 coins Source: Nomics

Zilliqa (ZIL), announced a partnership to Ramp, a payments infrastructure provider, and is expected release its metaverse project called Metapolis. It will be built upon unreal gaming engine, which is the same 3D technology behind Fortnite, PlayerUnkown’s Battlegrounds or PUBG.

Loopring (LRC), price soared by 51% following GameStop’s NFT marketplace integration of the Loopring network. Axie infinity (AXS), rallied 41%, as the team explained plans to gradually give control over the project’s treasury.

Axie will also launch Origin in the coming weeks. This game includes a reimagined storyline as well as active cards for the eye and ear parts.

Low retail demand indicates a low Tether premium

The OKXTether (USDT premium) is a useful indicator of China-based retail traders’ demand for crypto. It measures the difference in peer-to-peer USDT trades between China and the official U.S. currency.

The indicator’s fair value is 100 percent. Excessive buying tends to push it above its fair value. Tether’s market offering is oversubscribed during bearish markets, leading to a 4% discount or greater.

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

The Tether premium currently stands at 99.9%. This is neutral. Data shows that retail demand is not increasing despite price increases, which is strange considering the 15.3% increase in cryptocurrency capitalization.

Undecided traders are shown by the unofficial funding rates

The embedded rate for perpetual contracts, also called inverse swaps or inverse futures, is charged approximately every eight hours. Because their price closely tracks regular spot market prices, perpetual futures are a preferred derivative for retail traders.

This fee is paid by exchanges to avoid imbalances in exchange risk. Positive funding rates indicate that buyers (longs) require more leverage. The opposite happens when shorts (sellers), require more leverage. Therefore, the funding rate turns negative.

Weekly winners and losers from the top-80 coins Source: Nomics

You will notice that the average seven-day funding rate has been uneventful in most cases. This data shows a balanced demand for leverage between sellers (shorts) and longs (buyers).

Solana’s positive 0.20% weekly rate is 0.8% per month. This is not too much for futures traders. This rate can easily exceed 5% per month if there is an imbalance due to excessive optimism.

Some may argue that the Bitcoin price increase above $47,000 was the final nail in the coffin of the bears, as the cryptocurrency showed strength in the face of global macroeconomic uncertainty.

There are currently no signs of Asian retail traders being bullish, as indicated by the CNY Tether Premium. Additionally, there is no evidence of leverage longs (buyers), putting pressure on futures markets. The overall sentiment in crypto markets is neutral.

Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.

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