The total cryptocurrency market capitalization has increased by 2% over the past seven days to reach $850 billion. Even with the positive movement and bullish channel that started on November 20th, overall sentiment remains bearish, with year-to-date losses of 63.5%.
The price of Bitcoin (BTC) also gained just 2% for the week, but investors have little time to celebrate as the current level of $16,800 represents a 64% year-to-date decline.
Bankrupt exchange FTX has been at the center of the news flow after an exchange hacker went on to transfer some of the $477 million worth of stolen assets in a money-laundering attempt. On November 29, analysts claimed that part of the stolen funds was transferred to OKX.
The FTX saga has made politicians shout louder in their calls for regulation. On November 28, the president of the European Central Bank (ECB), Christine Lagarde, called the regulation and supervision of cryptocurrency an “absolute necessity”. The chairman of the Financial Services Committee of the United States House of Representatives, Maxine Waters, announced that lawmakers will investigate the bankruptcy of FTX on December 13.
On Nov. 28, Kraken, a US-based cryptocurrency exchange, agreed to pay more than $362,000 as part of a settlement to “resolve potential civil liability” for violating sanctions against Iran. According to the US Treasury Department’s Office of Foreign Assets Control, Kraken exported services to users who appeared to be in Iran while engaged in virtual currency transactions.
The 2% weekly gain in total market capitalization was mainly driven by the 7% positive price movement of Ether (ETH). The bullish sentiment also affected altcoins significantly, with 6 of the top 80 coins gaining 10% or more during this period.
Fantom (FTM) gained 29.3% on news that the Fantom Foundation has made consistent profits and has a 30-year runway without selling any FTM tokens.
Dogecoin (DOGE) surged 26.8% as investors raised expectations that Elon Musk’s vision for Twitter 2.0 would include some form of DOGE integration.
ApeCoin (APE) gained 15.6% after the community-led DAO Yuga Labs launched its marketplace to buy and sell NFTs from the ecosystem.
Chainlink (LINK) surged 11.1% ahead of the Dec. 6 beta launch of its staking services, increasing its owners’ chances of earning rewards.
Leverage demand is balanced between bulls and bears
Standing contracts, also known as reverse swaps, typically have an embedded exchange rate that settles 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.
The 7-day funding rate was close to zero for Bitcoin, Ether, and XRP, so the data shows balanced demand between leveraged longs (buyers) and shorts (sellers).
The only exception was BNB, which offered a weekly funding rate of 1.3% for leveraged shorts. While not severe for sellers, this reflects investors’ concerns about buying BNB at current price levels.
Traders should also analyze options markets to understand whether whales and arbitrage tables place higher bets on bullish or bearish strategies.
The options put/call ratio shows moderate bullishness
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.
A strike ratio of 0.70 indicates that open interest put options are more than 30% behind bullish calls and are therefore bullish. In contrast, the 1.20 indicator favors 20% put options, which can be considered bearish.
Although the price of Bitcoin failed to break the $17,000 resistance on November 30, there was no excessive demand for downside protection using options. As a result, it remained constant around 0.53. The Bitcoin options market is more heavily populated with neutral than bearish strategies, as indicated by the current level favoring call options (calls).
Despite weekly price gains in selected altcoins and even a 7.1% increase in the price of Ether, there is no sign of improving sentiment by derivatives metrics.
There is balanced demand for leverage using futures contracts, and even as Bitcoin price tests the $17,000 level, the BTC options risk assessment metric has not improved.
Currently, the odds favor the bettors that the $870 billion market cap resistance will hold strength, but a 5% downside move toward the $810 billion support is not enough to cancel the ascending channel, which could give the bulls much-needed room to break out of the contagion. . Risks arising from the bankruptcy of FTX.
This article does not contain investment advice or recommendations. Every investment and trading action involves risk and readers should do their own research before making a decision.
The views, opinions and opinions expressed herein are solely those of the authors and do not reflect or represent the views and opinions of Cointelegraph.