Total cryptocurrency market cap risks dropping below $1 trillion if these three metrics don’t improve

The total market capitalization of cryptocurrencies has ranged from $1.19 trillion to $1.36 trillion over the past 23 days, a relatively narrow range of 13%. During the same time, Bitcoin (BTC(3.5% and ether)ETHThe 1.6% gain for the week is far from encouraging.

So far, the total cryptocurrency market is down 43% in just two months, so investors are unlikely to celebrate even if the descending triangle formation breaks to the upside.

Total cryptocurrency market cap, $1 billion. Source: TradingView

Regulatory concerns continue to weigh on investor sentiment, a prime example being Japan’s quick decision to impose new laws after the collapse of Terra USD (UST) – now known as TerraUSD Classic (USTC). On June 3, the Japanese parliament passed a bill for Restricting stablecoin issuance of licensed banksmoney transfer agents and registered credit companies.

A few medium-cap altcoins rose, but the general sentiment was unaffected

The downtrend was clearly reflected in cryptocurrency markets like Fear and Greed IndexThe index reached 10/100 on June 3. The index has been below 20 since May 8, as the total capitalization of cryptocurrency lost $1.7 trillion to reach its lowest level since January 27.

Index of fear and greed in cryptography. Source: the alternative

Here are the winners and losers from the past seven days. While the two leading cryptocurrencies delivered modest gains, a handful of mid-cap cryptocurrencies are up 13% or higher.

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

Waves up 109% after liquidity surge Brought Going back to Vires Finance and the Neutrino protocol, the USDN stablecoin has reinstalled the $1.00 peg after a daily withdrawal limit of $1,000 was imposed on USDT and USDC.

Cardano (ADA) by 19% as investors anticipate that the “Vasil” Hard Fork scheduled for June 29 will improve scalability and functionality of smart contracts, spurring deposits into long-term decentralized finance applications on the network.

excellent (XLM) rose by 18.6% after Remittance giant MoneyGram Partnership with Stellar Development Foundation, to launch a service that allows its users to send and convert stablecoins into fiat currencies.

Solana (Sol8% lost due to a Unexpected block production stopped On June 1, auditors asked to orchestrate another major network restart after four hours of outage. The ongoing issue has negatively affected the network on seven occasions over the past 12 months.

Data indicate more pressure on prices

OKX rope (USDTThe premium is a good measure of retailer demand in China. It measures the difference between China-based peer-to-peer (P2P) trading and the US dollar.

Excessive buying tends to put pressure on the index above fair value at 100% and during bear markets, it floods the Tether market supply and causes a discount of 4% or higher.

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

Tether has been trading at a discount of 2% or higher on the Asian peer-to-peer markets since May 30. However, the index showed a modest deterioration as it bottomed at the 4% discount on June 1. This data leaves no doubt that retail traders were caught by surprise as the total value of the cryptocurrency failed to break the $1.3 trillion resistance.

Perpetual contracts, also known as reverse swaps, have a built-in rate that is typically charged every eight hours. Exchanges use these fees to avoid misalignments in exchange risk.

A positive funding rate indicates that longer contracts (buyers) require more leverage. However, the opposite situation occurs when short positions (sellers) require additional leverage, causing the financing rate to turn negative.

Accumulated future funding rate on 3 June. Source: Coinglass

Perpetual contracts reflected mixed sentiment as Bitcoin and Ethereum had a slightly positive (bullish) funding rate, but the altcoin rates were opposite. Solana’s negative 0.20% weekly rate equals 0.8% per month, which is not a major concern for most derivatives traders.

According to derivatives and trading indices, the market is at risk of seeing further declines. Evidence for this can be seen in the slightly higher demand for bearish positions on altcoins and the apparent lack of buying interest from the retail markets in Asia.

Bulls need to show strength and hold the support of the $1.19 trillion market capitalization to avoid an increase in leveraged sellers, bearish bets and subsequent negative price pressure.

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