Total Crypto Market Cap Shows Strength Even After Merge and Federal Reserve Rate Hike

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Cryptocurrencies have been in a bear trend since mid-August after failing to break above the $1.2 trillion market cap resistance. Even with the current bear trend and a brutal 25% correction, it was not enough to break the three-month bullish trend.

The total capitalization of the crypto markets fell 7.2% to $920 billion in the seven days leading up to September 21. Investors wanted to play it safe ahead of the meeting of the Federal Open Markets Committee, which decided to raise interest rates by 0.75%.

Total crypto market cap, USD billions. Source: TradingView

By raising the cost of borrowing cash, the monetary authority aims to curb inflationary pressures while increasing pressure on consumer finance and corporate debt. This explains why investors have moved away from risky assets, including stock markets, foreign exchange, commodities and cryptocurrencies. For example, WTI oil prices fell 6.8% as of Sept. 14 and the MSCI China stock market index fell 5.1%.

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Ether (ETH) also saw a 17.3% decline during the seven-day period and many altcoins underperformed. The merging of the Ethereum network and its subsequent impact on other GPU-mining coins caused some skewed results among the worst weekly performers.

Weekly winners and losers in the top 80 coins. Source: Nomics

Chiliz (CHZ) rose 21.5% after two successful fantoken launches from the MIBR esports team and the VASCO soccer team from Brazil.

XRP gained 16.6% after Ripple Labs called a federal judge to rule immediately whether the sale of the company’s XRP tokens violated US securities laws.

ApeCoin (APE) gained 15% as the community expects to launch the strike program which will be: detailed by Horizen Labs on Sept. 22.

RavenCoin (RVN) and Ethereum Classic (ETC) have recovered most of their gains from last week as investors realized that Ethereum miners’ hash speed gains did not necessarily translate into higher adoption.

Traders’ appetites have not disappeared despite the correction

The OKX Tether (USDT) premium is a good gauge of demand from crypto retailers in China. It measures the difference between China-based peer-to-peer transactions and the US dollar.

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Excessive buying demand tends to pressure the indicator above fair value by 100%, and during bearish markets, Tether’s market supply is flooded, causing a discount of 4% or more.

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

The Tether premium is currently at 100.7%, the highest level since June 15. While the indicator is still below neutral territory, the indicator showed a modest improvement over the past week. Considering crypto markets tanked by 7.2%, this data should be considered a win.

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid imbalances in exchange rate risk.

A positive funding ratio indicates that longs (buyers) require more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to become negative.

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Accumulated perpetual financing rate for futures on September 21. Source: Coinglass

As shown above, the seven-day accumulated funding rate was negative for each altcoin. This data indicates an excessive demand for shorts (sellers), although in the case of Ether it could be turned down because investors seeking the free fork coins during the merger likely bought ETH and sold futures contracts to close the position. to cover.

More importantly, Bitcoin’s funding rate remained slightly positive during a week of price decline and potentially bearish news from the FED. Now that this crucial decision has been made, investors tend to avoid new bets until new data provides insight into how the economy is adjusting.

Overall, the Tether premium and futures funding rate show no signs of stress, which is positive considering how poorly crypto markets have performed.

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