Total crypto marketplace cap indicates power even after the Merge and Federal Reserve charge hike

By: Ikenna Odunze

September 24, 2022 2:14 AM

Many of the top-eighty cryptocurrencies dropped by 15%+ within the past week, but the Tether top rate in Asia-primarily based futures markets indicates buyers continue to be calm.

After failing to break through $1.2 trillion in market cap in mid-August, cryptocurrencies have been in a downward trend ever since. Even with the current downtrend and a brutal 25% correction, it wasn't enough to break the three-month uptrend.

Total crypto market cap fell 7.2% to 920,000 in the seven days leading up to September one million dollars.

21. Investors wanted to play it safe before the meeting of the Federal Committee for Open Markets, which decided to raise interest rates by 0.75%.

[Total crypto market cap, USD billions]. Source: TradingView

By raising the cost of cash borrowing, the monetary authority aims to dampen inflationary pressures while increasing the strain on consumer financing and corporate debt. This explains why investors have moved away from risky assets, including stock markets, foreign currencies, commodities and cryptocurrencies. For example, since September 14, WTI oil prices are down 6.8% and the MSCI China stock index is down 5.1%.

Ether (ETH) is also down 17.3% over the seven days, with many altcoins underperforming. The collapse of the Ethereum network and its subsequent impact on other GPU mining coins caused some skewed results among the weekly worst performers.

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

Chiliz (CHZ) surged 21.5% after two successful token launches for fans of MIBR esports team and Brazilian soccer team VASCO.

XRP gained 16.6 ter Ripple Labs demanded a federal judge to rule immediately if the company's XRP token sales violate the US

Securities Laws.

ApeCoin (APE) is up 15% as the community awaits the launch of the staking program detailed by Horizen Labs on September 22.

RavenCoin (RVN) and Ethereum Classic (ETC) recouped most of their gains from the previous week as investors realized that Ethereum miners' hash rate gains didn't necessarily translate into greater adoption.

DESPITE THE CORRECT, APPETITE OF TRADERS WAS NOT LOST

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

Excessive buying demand tends to push the indicator 100% above fair value, and during bear markets it will The Tether Market is flooded with increased supply, resulting in a discount of 4% or more.

[ Tether (USDT) peer-to-peer vs. USD/CNY.] Source: OKX

Tether's premium is currently 100.7%, its highest level since June 15. Although still below the neutral zone, the indicator showed a slight improvement over the last week. Considering the crypto markets are down 7.2%, this data should be viewed as a win.

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 need more leverage. However, the opposite situation occurs when short sellers need additional leverage, making the funding rate negative.

 [ Accumulated perpetual futures funding rate on Sept. 21.] Source: Coinglass

As shown above, the seven-day cumulative funding rate for each altcoin was negative. This data suggests excessive demand for shorts (sellers), although this could be ruled out in the case of Ether as investors targeting free forks during the merger were likely buying ETH and selling futures contracts to hedge the position.

More Importantly, Bitcoin's funding rate remained modestly positive during a week of falling prices and possible bearish news from the Fed. Now that this important
decision has been made, investors are tending to avoid new bets until some new data provides insight into how the economy is adjusting.

Overall, Tether's premium and interest rate futures are showing no sign of stress, which is positive considering how poorly the crypto markets have performed.