Total crypto market cap rises above $1T, and data suggests more upside is in store

Despite the current damaging crypto and macroeconomic newsflow, the overall cryptocurrency market capitalization broke above $1 trillion on Jan. 21. An encouraging signal is that derivatives metrics will not be displaying elevated demand from bearish merchants in the mean time. 

Total crypto market cap in USD, 1-day. Source: TradingView

Bitcoin (BTC) worth gained 8% on the week, stabilizing close to the $23,100 stage at 18:00 UTC on Jan. 27 because the markets weighed the potential impression of Genesis Capital’s bankruptcy on Jan. 19.

One space of concern is Genesis Capital’s largest debtor is Digital Currency Group (DCG), which occurs to be its father or mother firm. Consequently, Grayscale funds administration may very well be in danger, so traders are uncertain if the Grayscale Bitcoin Trust (GBTC) property might face liquidation. The funding car presently holds over $14 billion price of Bitcoin positions for its holders.

A United States appeals courtroom is set to listen to the arguments regarding Grayscale Investment’s lawsuit towards the Securities and Exchange Commission (SEC) on March 8. The fund supervisor questioned the SEC’s choice to disclaim their asset-backed exchange-traded fund (ETF) launch.

Regulatory issues additionally negatively impacted the markets after South Korean prosecutors requested an arrest warrant for Bithumb exchange owner Kang Jong-Hyun. On Jan. 25, the Financial Investigation 2nd Division of the Seoul Southern District Prosecutor’s Office sentenced Kang and two Bithumb executives on fees of conducting fraudulent unlawful transactions.

The 7% weekly enhance in complete market capitalization was held again by Ether’s (ETH) 0.3% damaging worth transfer. Still, the bullish sentiment considerably impacted altcoins, with 11 of the highest 80 cash gaining 18% or more in the interval.

Weekly winners and losers among the many high 80 cash. Source: Messari

Aptos (APT) gained 91% after the sensible contract community complete worth locked (TVL) reached a record-high $58 million, fueled by PancakeSwap DEX.

Fantom (FTM) rallied 50% after the announcement of its new database system, Carmen, and a new Fantom Virtual Machine, Tosca.

Optimism (OP) confronted 21% positive factors after a pointy enhance in transaction volumes throughout an NFT incentive program known as Optimism Quest.

Leverage demand barely favors bulls

Perpetual contracts, also referred to as inverse swaps, have an embedded fee often charged each eight hours. Exchanges use this charge to keep away from alternate danger imbalances.

A optimistic funding fee signifies that longs (patrons) demand more leverage. However, the other scenario happens when shorts (sellers) require further leverage, inflicting the funding fee to show damaging.

Perpetual futures gathered 7-day funding fee on Jan. 27. Source: Coinglass

The 7-day funding fee was optimistic for Bitcoin and Ethereum, that means the data factors to barely increased demand for leverage longs (patrons) versus shorts (sellers). Still, a 0.25% weekly funding value is not sufficient to discourage leverage patrons.

Interestingly, Aptos was the one exception because the altcoin offered a damaging 0.6% weekly funding value — that means brief sellers have been paying to maintain their positions open. This motion might be defined by the 91% rally in 7 days and it suggests that sellers anticipate some kind of technical correction.

The choices put/name ratio reveals no indicators of concern

Traders can gauge the market’s general sentiment by measuring whether or not more exercise is going via name (purchase) choices or put (promote) choices. Generally talking, name choices are used for bullish methods, whereas put choices are for bearish ones.

A 0.70 put-to-call ratio signifies that put choices open curiosity lag the more bullish calls by 30% and is due to this fact bullish. In distinction, a 1.40 indicator favors put choices by 40%, which might be deemed bearish.

BTC choices quantity put-to-call ratio. Source:

Even although Bitcoin’s worth failed to interrupt the $23,300 resistance, the demand for bullish name choices has exceeded the neutral-to-bear places since Jan. 6.

Presently, the put-to-call quantity ratio stands close to 0.50 because the choices market is more strongly populated by neutral-to-bullish methods, favoring name (purchase) choices by 50%.

Related: Bitcoin will hit $200K before $70K ‘bear market’ next cycle — Forecast

Derivatives markets level to additional upside potential

After the third consecutive week of positive factors, which totals 40% year-to-date when excluding stablecoins, there are not any indicators of demand from brief sellers. More importantly, leverage indicators present bulls will not be utilizing extreme leverage.

Derivatives markets level to additional upside potential and even when the market revisits the $950 billion market capitalization from Jan. 18, there is no purpose for panic. Currently, Bitcoin choice markets present whales and market makers favoring the neutral-to-bullish methods.

Ultimately, the chances favor these betting that the $1 trillion complete market cap will maintain, opening room for additional positive factors.