Every time Bitcoin (BTC) fails to break through major resistance levels, traders gain confidence and increase their altcoin positions. The logic is that unless BTC drops significantly, these moves historically provide decent rewards for those who shift their portfolios toward higher risk.
Bitcoin/USD on FTX. Source: TradingView
Over the last seven days, the performance of the aggregate market capitalization of the cryptocurrency market showed a modest 3% increase to $1.78 trillion. This number is more or less in line with the performance seen in Bitcoin, Ether (ETH), and Binance Coin (BNB).
However, comparing the winners and losers among the top 80 coins provides biased results. For example, while the winners captured a positive move of 24.9% on average, the worst performers fell 5.9%.
Weekly winners and losers among the top 80 coins. Source: Nomics
Terra (LUNA) rallied 52% the week after the non-profit organization that supports the Terra blockchain ecosystem sold $1 billion worth of tokens on Feb. 22. Luna Foundation raised money from Three Arrows Capital and Jump Crypto, a trading group that previously helped Solana’s Wormhole cross the bridge platform by replenishing its stolen $300 million in Ether.
On Feb 21, WAVES gained 50.7% after announcing a partnership with Allbridge that makes the cross-chain protocol interoperable and compatible with Ethereum Virtual Machine (EVM) and non-EVM chains such as NEAR Protocol, Solana, and Terra. .
Arweave (AR) rallied 28.5% in seven days after the Bundlr Network published a twitter high volume archiving tool on February 21. The system allows users to store linked tweets and media directly in Arweave’s permanent storage.
Lastly, QuickSwap, the implementation of Uniswap (UNI) on the Polygon network, became the largest decentralized exchange DEX protocol by volume, reaching a daily average of $40 million in February. Uniswap token (UNI) gained 14.4% in the last seven days, while Polygon (MATIC) rallied 8.5%.
Tether Premium Reflects Low Retail Demand
OKX Tether (USDT) premium is a good indicator of crypto demand from China-based retail traders. It measures the difference between peer-to-peer transactions based in China and the official US dollar currency.
Excessive buying demand tends to push the indicator above 100% fair value, and during bear markets, Tether’s market supply is flooded, causing a discount of 4% or more.
Tether (USDT) peer-to-peer against USD/CNY. Source: OKX
Currently, the Tether premium stands at 100.3%, which is neutral. Still, there has been a steady improvement in 2022. This data indicates that retail demand is recovering, which is positive considering that the total capitalization of cryptocurrencies fell by 19% between January 1 and January 28. February.
Futures markets confirm lack of “euphoria”
Perpetual contracts, also known as reverse swaps, have a built-in fee that is typically charged every eight hours. Exchanges use this fee to avoid currency risk imbalances.
A positive funding rate indicates that long buyers require more leverage. However, the opposite situation occurs when short sellers require additional leverage, causing the funding rate to turn negative.
Cumulative perpetual futures funding rate on February 28. Source: Coinglass
As shown above, the 7-day cumulative funding rate is slightly negative in most cases. These data indicate a slightly higher demand for shorts (sellers), but it is insignificant. For example, Luna’s negative weekly rate of 0.65% equates to 2.8% monthly, a figure that is not too worrisome for futures traders.
If there had been a relevant risk appetite on the part of the shorts, the rate would be above 1% per week or equivalent to 4.6% per month.
Perpetual futures are the preferred derivatives of retail traders because their price tends to follow regular spot markets perfectly. Therefore, despite the negative 19% crypto return in 2022, Tether’s neutral premium and funding rate should be interpreted as positive.
The views and opinions expressed herein are solely those of the Author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should do your own research when making a decision.
This post 2 Key Derivatives Metrics Indicate Bitcoin Traders Expect BTC to Hold $40K
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