Investors became more confident about adding altcoin positions after Bitcoin (BTC), suffered its third consecutive rejection. The path to $50,000 seems more difficult than expected for the most popular cryptocurrency.
Euronews Next reports that the European Union rejected a rule proposal on March 14th that would have prohibited the PoW mining algorithm, which is energy-intensive. This was used by Bitcoin and other cryptocurrency. Many EU parliamentarians are pushing for PoW mining ban to address energy concerns.
BTC/USD Price at FTX Source: TradingView
The aggregate market capitalization for all cryptos was fairly flat over the last seven days. It registered a modest 0.4% increase to $1.77 trillion. However, this does not mean that there are no mid-capitalization altcoins. They managed to gain 17% in one week.
Bitcoin saw a 2.5% increase over the seven previous days while vice-leader Ether (ETH), experienced a 3.6% increase. They were not able to match the altcoin rally. Here are the top gainers, and losers, among the 80 most valuable cryptocurrencies based on market capitalization.
Weekly winners and losers from the top-80 coins Source: Nomics
THORChain, (RUNE), rallied following the March 10th enabling of synthetic tokens. These derivatives are tied to other collateralized assets. In THORChain’s version, the project has chosen to back its synths using 50% of the underlying asset as well as 50% in RUNE.
The privacy tokens ZCash and Monero rallied after the United States President Joe Biden signed an executive ordering on March 9, which focused on establishing a regulatory framework to crypto, including mention of its potential role in circumventing any sanctions.
Terra (LUNA), which was founded in January by Terraform Labs, donated $1.1 million to Luna Foundation Guard’s reserves (LFG) on March 11. LFG was created in January as part a larger effort to expand the Terra ecosystem’s stability and sustainability.
Fantom (FTM), on the other hand, was the worst performer after Anton Nell and Andre Cronje, prominent Fantom Foundation team members, announced their resignation.
Celo (CELO), meanwhile, was hacked on its third-party mail service on March 10. The Celo Foundation sent a phishing message to its 25,741 users. However, the attack was quickly investigated and alerts were posted across its social media channels.
Tether premium is a sign of resilience from the retail sector
The OKXTether (USDT premium) is a useful indicator of China-based retail traders crypto demand. 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 is currently at 100.7%. This is neutral. There has been an improvement in the last two months. This data is encouraging, considering the fact that cryptocurrency capitalization fell 50% between January 1 and March 14.
Lack of excitement in funding rates
The embedded rate for perpetual contracts, also called inverse swaps or inverse futures, is usually charged 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.
On March 14, the seven-day accumulated perpetual forwards funding rate was set at a rate of 7.5% Source: Coinglass
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 buyers (longs).
Polkadot (DOT) weekly rate of 0.30% is 1.2% 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 pessimism.
One might argue that the third failure of Bitcoin prices to exceed $42,000 was the final nail in the coffin of the bulls. The cryptocurrency failed to show strength during periods of global macroeconomic uncertainty, and a huge commodities rally.
However, Asian retail traders are not showing signs of bearishness, as indicated by the CNYTether premium. There is also no indication that there is any pressure from sellers (leverage shorts) on futures market.
Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.