Gains of about 13% over the previous six days brought the total market capitalization of cryptocurrencies closer to $1.1 trillion, but this wasn't enough to reverse the downward trend, and the overall trend for the previous 55 days turned bearish with the most recent support test, which landed at a total market cap of $950 billion. Although the recent 13% surge in the cryptocurrency market has been accompanied by improvements in the traditional market.
The Nasdaq Composite Index (1) showed a gain of 6.2% since September 6, and WTI oil (2) prices rose 7.8% since September 7. This data emphasizes the importance of regularly monitoring macroeconomic conditions and confirms the significant correlation with traditional assets. The correlation metric varies from a negative 1—which indicates that a particular market moves in the opposite direction—to a positive 1—which indicates symmetrical movement. A value of 0 indicates that there is no correlation between the two assets.
The Fed’s decision
The U.S. Federal Reserve (3) meeting on September 21 is anticipated by stock market traders and investors. Investors are looking for signs that the economy is slowing down ahead of the Federal Reserve meeting, where the central bank is expected to raise interest rates again. The market anticipates a third consecutive 0.75% rate hike.
The U.S. Consumer Price Index report (4) claims that on September 13 and September 15, when the market's focus will be firmly fixed on the U.S. retail sales and industrial output data and a crucial inflation gauge, it is to be anticipated. The financial regulator just announced that it would keep looking into and taking enforcement steps against crypto businesses, so the regulatory tone is still overwhelmingly unfavorable.
Pro Traders were reluctant to leverage longs despite the altcoin rally
While Terra (LUNA) soared 107.7% after Terra approved a request for an additional allocation of over 19 million LUNA tokens, Bitcoin (BTC) stood out with a 12.5% rise, allowing for the dominance rate to achieve 41.3%, the highest since August 9. Following the network hash rate reaching 5.7 TH per second, which is the greatest level since January 2022, RavenCoin RVN also increased by 65.8%.
Cosmos (ATOM) increased by 24.6% as a result of Delphi Digital refocusing its research and development department on the Cosmos environment. Even with such high figures and a lengthy streak of successful performance, professional traders' positions cannot be fully understood without a thorough analysis of the futures market.
Exchanges use these fees to avoid exchange risk imbalances, and perpetual contracts and inverse swaps have an embedded rate that is levied every eight hours. A negative funding rate, on the other hand, suggests that sellers need additional leverage, which is the reverse of what a positive funding rate indicates, which means that buyers need more leverage.
Even while a 0.30% weekly cost being maintained over a bear position should not be judged meaningful, perpetual contracts represent a neutral feeling as the accumulated funding rate is generally flat, with the exceptions being Ether ETH and Ether Classic ETC. Furthermore, given that the switch to a proof-of-stake network is anticipated for September 15, these occurrences are probably connected to the Ethereum Merge.
High Downtrend Odds
The positive 8.3% weekly performance cannot be taken into account as a tendency to alter the move under consideration that is probably linked to the recovery in traditional markets, where one may suppose that investors are likely to price in the risk of increased regulatory impact. The FOMC interest rate decision (5) is a major event, and there is still uncertainty regarding potential macroeconomic triggers and traders who are unlikely to take on additional risk before it, giving the bears reason to believe that the current longer-term descending formation will resume in the coming weeks.
The net futures funding rate, which is another indicator of unfavorable investor sentiment, shows that professional traders do not have any interest in leveraged long positions. Traders can anticipate a 12.5% price decline from the current $1.08 billion level if the crypto total market capitalization tests the bearish pattern support level at $940 million.