2 key derivatives stats indicate that Bitcoin traders expect BTC to reach $40K. will love

Whenever Bitcoin (BTC) fails to break through significant resistance levels, traders gain confidence and increase their altcoin positions. The logic is that unless BTC drops significantly, historically these moves offer decent rewards for those who move their portfolios into higher risk.

Bitcoin/USD at FTX. Source: TradingView

Over the past seven days, the total market cap performance of the cryptocurrency market showed a modest increase of 3% to $1.78 trillion. This number roughly matches the performance of Bitcoin, Ether (ETH) and Binance Coin (BNB).

However, comparing the winners and losers among the top-80 coins produces skewed results. For example, while the gainers posted a positive move of 24.9% on average, the worst performers fell 5.9%.

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

Terra (LUNA) rose 52% in the week after the nonprofit that backs the Terra blockchain ecosystem sold $1 billion worth of tokens on Feb. 22. Luna Foundation raised funds from Three Arrows Capital and Jump Crypto, a trading group that previously helped Solana’s Wormhole cross bridge platform by replenishing their stolen $300 million in Ether.

On February 21, WAVES gained 50.7% after announcing a collaboration with Allbridge that makes the protocol cross-chain interoperable and supports the Ethereum Virtual Machine (EVM) and non-EVM chains such as NEAR Protocol, Solana, and Terra.

Arweave (AR) rose 28.5% in seven days after Bundlr Network released a High Volume Twitter Archiving Tool on February 21. The system allows users to save tweets and linked media directly to Arweave’s permanent storage.

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

Tether premium reflects low retail demand

The OKX Tether (USDT) premium is a good gauge of cryptocurrency demand in China. It measures the difference between China-based peer-to-peer transactions and the official US dollar.

Excessive buying demand tends to pressure the indicator above fair value by 100%, and during bearish markets, Tether’s market supply is flooded, causing a discount of 4% or more.

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

Currently, the Tether premium is at 100.3%, which is neutral. Nevertheless, there has been a consistent improvement in 2022. This data indicates that retail demand is picking up, which is positive as the total cryptocurrency capitalization dropped by 19% between January 1 and February 28.

Futures markets confirm lack of “euphoria”

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

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

Accumulated perpetual financing rate for futures on Feb. 28. Source: Coinglass

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

If there had been a relevant risk appetite of shorts, the rate would be higher than 1% per week or equal to 4.6% per month.

Perpetual futures are the preferred derivatives of retailers because their price follows regular spot markets perfectly. Therefore, despite the negative crypto performance of 19% in 2022, the neutral Tether premium and funding rate should be interpreted as positive.

The views and opinions expressed here are solely those of the writer and do not necessarily reflect the views of Coin-Crypto. Every investment and trading move involves risks. You should do your own research when making a decision.

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