As the price of Bitcoin moves towards $20,000, the total value of the cryptocurrency market is approaching $1 million

The total cryptocurrency market capitalization hit a two-month high on January 13 after surpassing the $900 billion mark on January 12.

While a 15.5% annual gain sounds promising, this level is still 50% below the $1.88 trillion cryptocurrency market seen before the collapse of the Terra-Luna ecosystem in April 2022.

Total capitalization of cryptocurrency markets, USD. Source: TradingView

“Hopeful skepticism” is probably the best description of the mood of most investors right now, especially after the recent struggles to recapture a $1 trillion market capitalization in early November. That rally to $1 trillion was followed by a three-day correction of 27.6%, canceling out any bullish momentum traders had anticipated.

Bitcoin (BTC) has gained 15.7% year to date, but a different scenario has emerged for altcoins, with a handful of them gaining 50% or more over the same period. Some investors attribute this increase to the US Consumer Price Index (CPI) data released on January 12, which confirms the thesis that inflation continues to fall.

Although macroeconomic conditions are improving, the situation for cryptocurrency companies looks bleak. New York-based Metropolitan Commercial Bank (MCB) announced on January 9 that it will close its crypto-asset vertical, citing changes in the regulatory landscape and recent setbacks in the industry. Crypto-related customers accounted for 6% of the bank’s total deposits.

On January 12, the US Securities and Exchange Commission (SEC) charged crypto lending firm Genesis Global Capital and crypto exchange Gemini with offering unregistered securities through Gemini’s “Gazan” program.

The latest blow came on January 13 after announced a new wave of layoffs, slashing its global workforce by 20%. Other cryptocurrency exchanges that have announced job cuts in the past month include Kraken, Coinbase and Huobi.

Despite the dire news flow, macroeconomic tailwinds favoring risk assets saw only UNUS SED (LEO) close the first 13 days of 2023 in the red.

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

Lido DAO (LDO) gained 108% as investors anticipate the upcoming Ethereum Shanghai upgrade, which will allow for staked Ether mining, to boost demand for liquid staking protocols.

Aptos (APT) surged 98% after some decentralized applications, including Liquidswap DEX, Ditto Finance sting and revenue and NFT market Topaz Market, started to increase volume.

Optimism (OP) has gained 70% since the activation of its level 2 network, surpassing Ethereum main chain transactions along with its competitor Arbiturm.

Leverage demand is balanced between bulls and bears

Standing contracts, also known as reverse swaps, typically have an internal exchange rate that is settled every eight hours. Exchanges use this fee to hedge currency risk imbalances.

A positive funding ratio indicates that long-term (buyers) require more leverage. However, the opposite occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

7-day funding rate on January 13 fixed futures. Source: Coinglass

The 7-day funding rate was close to zero for Bitcoin and altcoins, meaning the data shows balanced demand between leveraged longs (buyers) and shorts (sellers).

If bears are paying 0.3% per week to hold their leveraged bets on Solana (SOL) and BNB, that adds up to just 1.2% per month – not worth it for most traders.

Related: Bitcoin price rises to $19,000, but an analyst says a retest of $17,300 could happen next.

Traders’ demand for neutral-to-bullish options has increased

Traders can gauge overall market sentiment by gauging whether more activity is coming from call (buy) or put (sell) options. Generally, call options are used for bullish strategies and put options are used for bearish strategies.

The odds ratio of 0.70 indicates that put options are outperforming more bullish calls by 30%, which is bullish. In contrast, the 1.40 indicator favors 40% put options, which can be considered bearish.

BTC options volume to call ratio. Source:

Protective put options dominated the space as the indicator rose above 1 from January 4th to 6th. Eventually, the move weakened and a reversal occurred, as demand for neutral-bull call options exceeded January. 7.

The lack of leveraged shorts and protective demand point to a bullish trend

Given a 15.7% gain since the start of 2023, derivatives performance shows signs of zero demand from leveraged shorts or protective put options. While the bulls may note that the $900 billion total market capitalization is facing little resistance, the derivative metrics show that the bears are still patiently waiting for an entry point for their shorts.

Given the market’s bearish news flow, the bulls’ main hope remains within a favorable macroeconomic environment, depending only on how retail sales data is reported next week.

China is expected to announce its economic figures on January 16, and the United States on January 18. Another potential price influence could be the United Kingdom’s CPI print, which will be released on January 18.