Ripple Invests $25M in Bitnomial’s Platform to Build Regulated Derivatives Market for Digital Assets Like XRP

October 16, 2024 Bitcoin.com

Does Bitcoin’s negative funding rate signal that bears are in total control?

September 11, 2024 Coin Telegraph

Bitcoin stagnates as bearish headwinds continue to blow

August 15, 2024 Coin Telegraph

Bitcoin weekly funding rate reflects investor caution, yet BTC price pushes higher

July 15, 2024 Coin Telegraph

Bullish

Bitcoin trades above $63,000 but the futures weekly funding rate shows pro traders are cautious.

Bitcoin (BTC) price surged 9.7% from July 13 to July 15, pushing it to around $63,500. This rally managed to reverse the losses from the previous nine days, yet the $65,000 resistance level remained unbroken for four consecutive weeks. Some traders attribute this recovery to speculation that China may lift its long-standing ban on Bitcoin. However, no official statement from the Chinese government has confirmed such rumors.

Despite the positive outlook, which includes a leading US presidential candidate expressing support for Bitcoin, BTC derivatives do not reflect the same enthusiasm. Market participants are now wondering if there is sufficient demand to break the $65,000 barrier and whether the weekend gains can be sustained.

Analysts have firmly denied the rumors, stating that China is unlikely to allow its citizens to freely trade Bitcoin using the local Renminbi currency. Mikko Ohtamaa, the co-founder of algorithmic investment protocol Trading Strategy, emphasized that a significant shift in China's stance on Bitcoin would conflict with the government's political agenda to curb "capital flight". Additionally, experts note that Chinese investors are currently prohibited from investing in spot Bitcoin and Ethereum exchange-traded funds (ETFs) in Hong Kong, despite its close ties with mainland China.

Why are top Bitcoin traders bullish despite BTC price dip to $64.3K?

June 18, 2024 Coin Telegraph

Altcoin prices briefly rebounded, but derivatives metrics predict worsening conditions

May 20, 2022 Coin Telegraph

Asia

Declining demand for Tether and negative futures premiums for altcoins reflect a growing disinterest from crypto investors.

On May 12, the total crypto market capitalization reached its lowest close in 10 months and the metric continues to test the $1.23 trillion support level. However, the following seven days were reasonably calm while Bitcoin (BTC) gained 3.4% and Ether (ETH) added a modest 1.5%. Presently, the aggregate crypto cap stands at $1.31 trillion.

*Total crypto market cap, USD billion. Source: TradingView*

Ripples from Terra's (LUNA) collapse continue to impact crypto markets, especially the decentralized finance industry. Moreover, the recent decline in traditional markets has led to a loss of $7.6 trillion in market cap from the Nasdaq Stock Market Index, which is higher than the dot-com bubble and the March 2020 sell-offs.

On May 17, U.S. Federal Reserve Chairman Jerome Powell confirmed their intention to suppress inflation by raising interest rates but he cautioned that the Fed's tightening movement could impact the unemployment rate.

The bearish sentiment spilled to crypto markets and the "Fear and Greed Index," a data-driven sentiment gauge, hit 8/100 on May 17. This is the metric’s lowest value since March 28, 2020, two weeks after the generalized crash that sent oil futures to negative levels and brought Bitcoin (BTC) below $4,000.

Below are the winners and losers from the past seven days. While the two leading cryptocurrencies presented modest gains, a handful of mid-capitalization altcoins rallied 15% or higher.

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

Monero (XMR) rallied 22% as investors awaited the "tail emission" to be implemented at block 2,641,623 or sometime around June 4. The community decided to include a 0.6 XMR minimum reward in every block, so miners are not 100% reliant on transaction fees.

Cosmos (ATOM) gained 16.5%, a movement that seems a part of a broader retracement that started on May 12 when ATOM fell to its eleven-month low near $8. It is worth noting that its parent chain, Cosmos Hub, witnessed massive capital outflows from its liquidity pools, according to reporting from Cointelegraph.

Klaytn (KLAY), a blockchain-backed by South Korean internet giant Kakao, announced on May 16 that it would provide infrastructure, and initial nodes, and develop early use cases for the Blockchain-based Service Network (BSN), providing an entry into the Chinese market

The Tether premium shows slight discomfort

The OKX Tether (USDT) premium is a good gauge of China-based retail trader crypto demand. It measures the difference between China-based peer-to-peer (P2P) trades and the United States dollar.

Excessive buying demand tends to pressure the indicator above fair value at 100% and during bearish markets, Tether’s market offer is flooded and causes a 4% or higher discount.

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

The Tether premium peaked at 5.4% on May 12, its highest level in more than six months, but the movement could have been related to the Terra ecosystem’s massive outflows, which were mainly the USD Terra (UST) stablecoin.

More recently, the indicator showed a modest deterioration as it currently holds a 1.8% discount. The lack of retail demand is not especially concerning because the total cryptocurrency market capitalization lost 34% in the past month.

Altcoin futures reflect disinterest in leverage

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

*Accumulated perpetual futures funding rate on May 20. Source: Coinglass*

Perpetual contracts are reflecting mixed sentiment as Bitcoin and Ethereum hold a slightly positive (bullish) funding rate, but altcoins signal the opposite. For example, Solana's (SOL) negative 0.35% weekly rate equals 1.5% per month, which is not a concern for most derivatives traders.

Considering that derivatives indicators are showing little improvement, there's a lack of trust from investors as the total crypto market capitalization battles to keep the $1.23 trillion support. Until this sentiment improves, the odds of an adverse price movement remain high.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Any dip buyers left? Bulls are largely absent as the total crypto market cap drops to $1.65T

May 6, 2022 Coin Telegraph

Any dip buyers left? Bulls are largely absent as the total crypto market cap drops to .65T

1inch

Weak retail demand and bearish derivatives data reflect a dismal short-term outlook for the crypto market.

The total crypto market capitalization has been trading within a descending channel for 24 days and the $1.65 trillion support was retested on May 6. The drop to $1.65 trillion was followed by Bitcoin (BTC) reaching $35,550, its lowest price in 70 days.

In terms of performance, the aggregate market capitalization of all cryptocurrencies dropped 6% over the past seven days, but this modest correction in the overall market does not represent some mid-capitalization altcoins, which managed to lose 19% or more in the same time frame.

As expected, altcoins suffered the most

In the last seven days, Bitcoin price dropped 6% and Ether (ETH) declined by 3.5%. Meanwhile, altcoins experienced what can only be described as a bloodbath. Below are the top gainers and losers among the 80 largest cryptocurrencies by market capitalization.

Tron (TRX) rallied 26.9% after TRON DAO rolled out a USDD, a decentralized stablecoin, on May 5. The algorithmic stablecoin is connected to the Ethereum and BNB Chain (BNB) through the BTTC cross-chain protocol.

1inch (1INCH) gained 5.6% after the decentralized exchange governance application became Polygon’s (MATIC) network leader by completing 6 million swaps on the network.

STEPN (GMT), the native token of the popular move-to-earn lifestyle app, declined 35.7%, adjusting after a 70% rally between April 18 and April 28. A similar movement happened to Apecoin (APE) after the token pumped 94% between April 22 and April 28.

The Tether premium flipped negative on May 6

The OKX Tether (USDT) premium gauges China-based retail demand and it measures the difference between the China-based peer-to-peer trades and the United States dollar.

Excessive buying demand puts the indicator above fair value at 100%. On the other hand, Tether’s market offer is flooded during bearish markets, causing a 4% or higher discount.

The OKX Tether premium peaked at 1.7% on April 30, indicating some excess demand from retail. However, the metric reverted to a 0% premium over the next five days.

More recently, in the early hours of May 6, the OKX Tether premium flipped to -1% negative. Data shows retail sentiment worsened as Bitcoin moved below $37,000.

Futures markets show mixed sentiment

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

*Accumulated 7-day perpetual futures funding rate. Source: Coinglass*

As shown above, the accumulated seven-day funding rate is slightly positive for Bitcoin and Ether. Data indicates slightly higher demand from longs (buyers), but nothing that would force traders to close their positions. For instance, a positive 0.15% weekly rate equals 0.6% per month, thus unlikely to cause harm.

On the other hand, altcoins’ 7-day perpetual futures funding rate was -0.30%. This rate is equivalent to 1.2% per month and indicates higher demand from shorts (sellers).

Signs of weak retail demand as indicated by OKX Tether data and the negative funding rate on altcoins are a signal that traders are unwilling to buy at the critical $1.65 trillion crypto market capitalization. Buyers seem to be waiting for further dips before stepping in, so further price corrections will likely follow.

2 key derivatives metrics signal that Bitcoin traders expect BTC to hold $40K

February 28, 2022 Coin Telegraph

2 key derivatives metrics signal that Bitcoin traders expect BTC to hold K

Arweave

The entire crypto market is green on Feb. 28, and derivatives metrics suggest that BTC's bullish reversal will flip $40,000 back to support.

Whenever Bitcoin (BTC) fails to break through important resistance levels, traders gain confidence and add to their altcoin positions. The logic is that, unless BTC drops significantly, these movements historically provide decent rewards for those shifting their portfolios toward higher risk.

*Bitcoin/USD at FTX. Source: TradingView*

In the past seven days, the aggregate market capitalization performance of the cryptocurrency market showed a modest 3% increase to $1.78 trillion. This number is roughly in line with the performance seen from Bitcoin, Ether (ETH) and BNB.

However, comparing the winners and losers among the top-80 coins provides skewed results. For instance, while the gainers captured a positive 24.9% move on average, the worst performers dropped by 5.9%.

Terra (LUNA) rallied 52% on the week after the nonprofit organization supporting the Terra blockchain ecosystem sold $1 billion worth of tokens on Feb. 22. Luna Foundation raised money from Three Arrows Capital and Jump Crypto, a trading group that earlier assisted Solana's Wormhole cross-bridge platform by replenishing their stolen $300 million in Ether.

On Feb. 21, WAVES gained 50.7% after announcing a partnership with Allbridge that makes the protocol cross-chain interoperable and supportive of the Ethereum Virtual Machine (EVM) and non-EVM chains like NEAR Protocol, Solana (SOL) and Terra (LUNA).

Arweave (AR) rallied 28.5% in seven days after Bundlr Network released a high-volume Twitter archiver tool on Feb. 21. The system allows users to store tweets and linked media directly onto Arweave's permanent storage.

Lastly, QuickSwap, the Uniswap (UNI) implementation on the Polygon network, became the largest decentralized exchange DEX protocol by volume, reaching a $40 million daily average in February. Uniswap (UNI) token gained 14.4% over the past seven days, while Polygon (MATIC) rallied 8.5%.

The Tether premium reflects low retail demand

The OKX Tether (USDT) premium is a good gauge of China-based retail trader crypto demand. It measures the difference between China-based peer-to-peer trades and the official U.S. dollar currency.

Excessive buying demand tends to pressure the indicator above fair value at 100%, and during bearish markets, Tether's market offer is flooded, causing a 4% or higher discount.

Currently, the Tether premium stands at 100.3%, which is neutral. Still, there has been a consistent improvement in 2022. This data signals that retail demand is picking up, which is positive considering that the total cryptocurrency capitalization dropped 19% between Jan. 1 and Feb. 28.

Futures markets confirm a lack of "euphoria"

Perpetual contracts, also known as inverse swaps, have an embedded rate usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

Accumulated perpetual futures funding rate on Feb. 28. Source: Coinglass

As depicted above, the accumulated 7-day funding rate is slightly negative in most cases. This data indicates slightly higher demand from shorts (sellers), but it is insignificant. For example, Luna's negative 0.65% weekly rate equals 2.8% per month, a figure th is not too concerning for futures traders.

Had there been a relevant risk appetite from shorts, the rate would be above 1% per week or equivalent to 4.6% per month.

Perpetual futures are retail traders' preferred derivatives because their price tends to track regular spot markets perfectly. Therefore, despite the negative 19% crypto performance in 2022, the neutral Tether premium and the funding rate should be interpreted as positive.

Bitcoin and altcoins took a hit, but derivatives data reflects a calmer market

December 6, 2021 Coin Telegraph

Chiliz

BTC and altcoins took a beating over the weekend, but data shows a market with healthier trading conditions, even if prices consolidate for the foreseeable future.

Looking at the winners and losers of the past week clearly shows that traders endured some serious heat as the total crypto market capitalization dropped by 12.7% when Bitcoin fell to $41,000. This sharp downside move knocked the figure from $2.37 trillion to $1.92 trillion on Dec. 3 and a total of $2 billion long future contracts were liquidated.

*Top winners and losers from top 80 coins. Source: Nomics*

Bitcoin (BTC) price retraced 14.6% over the past week, effectively underperforming the broader altcoin market. Part of this unusual movement can be explained by the performance seen in decentralized applications which held up better than most of the market. Data shows Ether (ETH) traded down 6.0%, Binance Coin (BNB) lost 7.3% and Solana (SOL) dropped by 7.8%.

This week's top gainers include OKEx’s OKB token (OKB) and Bitfinex's UNUS (LEO). Perhaps these benefited from not having a United States entity because the regulatory uncertainties in the region continue to increase. Moreover, scaling solutions Polygon (MATIC) and Algorand (ALGO) benefited from Ethereum's $40 or higher network transaction fees.

Terra (LUNA) featured on last week's top performers after its built-in token burn mechanism significantly reduced the supply. Meanwhile, Stacks (STX), previously known as Blockstacks, pumped after D'Cent wallet included support for SIP010 tokens.

Sharing solutions had a disappointing week

Among the worst performers were three decentralized sharing solutions: Theta Network (THETA), Filecoin (FILE), and Internet Computer (ICP). They were not alone, as some of the sectors' altcoins below the top-80 also crashed. Siacoin (S.C.) endured a 34% drawdown and Ankr Network (ANKR) dropped by 31.8%.

Chiliz (CHZ) suffered direct competition after Binance successfully launched an independent soccer fan token called SANTOS. Initially, Chiliz’ platform was created to host exclusive promos, services and voting for their fan tokens and more recently the project ventured into the non-fungible NFT market. However, that initiative also lost impact after soccer player Neymar launched a collection with NFTStar.

Despite being among the bottom performers, decentralized exchange aggregator 1inch Network (1INCH) concluded a $175 million Series B investment round and these funds will be used to expand the protocol’s utility.

Tether’s premium and the futures' perpetual premium held up well

The OKEx Tether (USDT) premium measures the difference between China-based peer-to-peer (P2P) trades and the official U.S. dollar currency, and in the past week it decreased slightly.

*OKEx USDT peer-to-peer premium vs. USD. Source: OKEx*

Currently the indicator has a 98% reading, which is slightly bearish, signaling weak demand from crypto traders to convert cash into stablecoins. Even at its best moment over the past two months, it failed to surpass 99%, so Chinese players have not been excited about the general market.

The overall impact of last week’s correction was a drop in the total futures open interest, down 28% to $16.7 billion. Nevertheless, the move was expected since the total market cap retraced and some $3.9 billion worth of liquidations took place during the week.

More importantly, the funding rates on Bitcoin and Ethereum futures quickly recovered from Dec. 3 price crash. Even though longs (buyers) and shorts (sellers) are matched at all times in any futures contract, their leverage varies.

Consequently, to balance their risk, exchanges will charge a funding rate to whichever side is using more leverage and this fee is paid to the opposing side.

*BTC and ETH perpetual futures 8-hour funding rates. Source: Coinglass.com*

Data reveals that a modest bearish trend occurred on Dec. 3 and 4 as the 8-hour funding rate went below zero. A negative funding rate shows that shorts (seller) were the ones paying the fees, but the movement faded as soon as BTC and ETH prices bounced 15% from their lows.

The above data might not sound encouraging, but considering that Bitcoin suffered considerable losses this week, the overall market structure held nicely. If the situation was worse, one would definitively not expect a 99% Tether premium or a positive perpetual funding rate.

Ethereum approaches a new ATH, but derivatives data reflects mixed emotions

November 30, 2021 Coin Telegraph

Coin Telegraph

Ethereum price appears en-route to a new all-time high, but data shows retail and pro investors are slightly skeptical about the current rally.

Today Ether (ETH) price briefly touched $4,760, exciting investors and reminding the world that the altcoin is a mere 2.2% below the $4,870 all-time high reached 20 days ago. While the spot price action might be intriguing, let’s see what’s happening in Ether’s derivatives markets.

*Ether ETH/USD price at Bitstamp. Source: TradingView*

While it is possible to draw a descending channel that shows support at $3,960, today's 5.4% positive move seems decoupled from Bitcoin's (BTC) negative performance.

Earlier today, commodities and stocks took a hit after the U.S. Federal Reserve acknowledged that inflation is more than just a "transitory" trend and Fed chair Jerome Powell said that the bank's relaxed money policies could end sooner than anticipated.

Retail traders are not fully confident

To understand how confident traders are about Ether's price recovery, one should analyze the perpetual contracts futures data. This instrument is the retail traders' preferred market because its price tends to track the regular spot markets.

In any futures contract trade, longs (buyers) and shorts (sellers) are matched at all times, but their leverage varies. Consequently, exchanges will charge a funding rate to whichever side demands more leverage, and this fee is paid to the opposing side.

*Ether perpetual futures 8-hour funding rate. Source: Coinglass.com*

Neutral markets tend to display a 0% to 0.03% positive funding rate which is equivalent to 0.6% per week. This indicates that longs are the ones paying and data shows retail traders have been mostly neutral since Nov. 4 and the last move above 0.07% happened on Oct. 21.

Top traders have reduced their long positions

Exchange-provided data highlights traders' long-to-short net positioning. By analyzing every client's position on the spot, perpetual and futures contracts, one can better understand whether professional traders are leaning bullish or bearish.

There are occasional discrepancies in the methodologies between different exchanges, so viewers should monitor changes instead of absolute figures.

*Exchanges top traders ETH long-to-short ratio. Source: Coinglass.com*

Despite Ether's 17% rally over the past four days, top traders at Huobi and OKEx decreased their longs. This move was even more evident at OKEx because the indicator made a drastic move from favoring bulls by 120% on Nov. 25 to a meager 30% advantage three days later.

Currently, data indicates that whales and arbitrage desks have reduced their long exposure, while retail traders remain suspicious of the recent bull run.

Perpetual