Traders’ recent Bitcoin gains are talking about a trend reversal, but various indicators remain bearish

Traders' recent Bitcoin gains are talking about a trend reversal, but various indicators remain bearish

As of May 30, the total capitalization of the cryptocurrency market has increased by 4% and is currently within the market capitalization range of $ 1.3 trillion. This move was enough to erase the previous seven days ’losses and was primarily driven by a 4.9% bitcoin (BTC) gain during this time frame.

Total capitalization of the cryptocurrency market, in billions of dollars. Source: Trade View

Apart from bitcoin, Cardano (ADA) is the only major capitalist to end the week with a positive performance of 4.5%. Meanwhile, (ETH), BNB, Ripple (XRP) and Solana (SOL) failed to show weekly gains.

The Bitcoin rally came after the U.S. stock market showed gains for the first time after seven consecutive negative weeks. A positive performance of 6.6% at the end of May 22 came after the longest losing streak in over a decade for the S&P 500.

According to Yahoo! Finance, “a series of favorable quarterly returns from major retailers has helped allay concerns, at least temporarily, about the potential impact of inflationary purchases on profit margins.” For example, Macy’s (M) gained 29.1% in the week, followed by Nordstrom (JWN), which posted a positive performance of 25.4%, and Ross Stores (ROST), which gained 25.4% 21.5%.

Strangely enough, JP Morgan sent out a research note to its clients on May 25 claiming that the fair value of bitcoin was $ 38,000. The global investment bank also said the collapse of Terra (LUNA) did not hurt demand for cryptocurrencies from venture capitalists.

On May 23, at the World Economic Forum (WEF) in Davos, Switzerland, PayPal Vice President Richard Nash said the company plans to embrace all possible crypto and blockchain services. After rolling out its bitcoin exchanges across the United States in 2020, PayPal continues to expand its digital currency-related offering.

Below are the winners and losers of the game over the past seven days. While major cryptocurrencies showed modest movements, some mid-cap altcoins showed high volatility.

Winners and losers of the week among the top 80 cryptocurrencies. Source: Nomics

Synthetix (SNX) rose 15.8% after Kwenta, a discount – free derivatives trading app powered by Synthetix, reached $ 325 million in volume.

Helium (HNT) gained 15.2% after details of Enhancement Recommendation # 51 were released on May 27th. The change introduces a framework to allow sub-networks to have their own assertiveness and governance.

STEPN Governance (GMT) lost 14.6% after blocking access to its mobile app for users located in mainland China.

Terra Luna Classic (LUC), formerly known as LUNA, fell 12.2% after South Korean authorities cited all Terraform Labs employees in a wide-ranging investigation.

Given the mixed performance of altcoin markets, it is interesting to examine how traders position themselves in terms of trading indicators and derivatives.

Tether bounty shows a lack of consumer demand

The OKX Tether (USDT) premium is a good indicator of demand for cryptocurrencies from retail traders based in China. It measures the difference between peer-to-peer (P2P) transactions based in China and the US dollar.

Excessive buying demand usually puts pressure on the indicator above fair value. In contrast, during bear markets, Tether market supply is flooded, resulting in a 4% or greater discount.

Tether Peer (USDT) transactions against USD / CNY pair. Source: OKX

Between May 23 and May 30, Tether’s premium fell by an average of 2% in CNY terms, reflecting a lack of consumer demand. More importantly, the 4% rally in crypto market capitalization on May 30 did not change investor sentiment.

Read also: Youngest Cryptocurrency Investors Oppose Headlines – and Headlines

Derivatives indicators are a bit bearish for altcoins

Permanent contracts, also known as reverse exchanges, have an embedded rate that is typically charged every eight hours. Exchanges use this rate to avoid currency risk imbalances.

A positive funding rate indicates that long (long) jobs need more leverage. However, the opposite occurs when short (short) positions require additional leverage, causing the funding rate to become negative.

Cumulative rate of funding for perpetual futures as at 30 May. Source: Coinglass

Perpetual contracts show a mixed attitude as bitcoin and ether have maintained a slightly positive (bullish) funding rate, but altcoins have shown otherwise. For example, Solana’s negative weekly rate of 0.20% is 0.8% per month, which is irrelevant to most derivatives traders.

The data suggests that investors are in no hurry to confirm that the recent price change represents a reversal of the trend. While the total capitalization of the cryptocurrency market has exceeded $ 1.3 trillion support, traders are pricing in higher probabilities for a downturn. To date, there is no clear indication of the bottom of the market according to the trading indicators.

These are only the views and opinions expressed hereinauthor and do not necessarily represent those of Cointelegraph. All investments and trades involve risk. You should do your own research before making a decision.

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