Excluding Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), and stablecoins, its market cap rose 9.3 percent from $382 billion on Feb. 4 to $418 billion. Few altcoins were negatively impacted. So what will happen now? Cryptocurrency analyst examines two indicators. cryptocoin.com We convey the details as…
Two indicators in Bitcoin and altcoin market: What do they show?
Cryptocurrency analyst Marcel Pechman examines two indicators in the stablecoins and futures market. First, the OKEx Tether (USDT) premium measures the difference between China-based peer-to-peer (P2P) transactions and the official US dollar currency. Excessive cryptocurrency retail investor demand tends to suppress the indicator to fair value. On the other hand, bearish markets are causing a premium cut in Tether. Currently, the metric shows 99.5 percent of data that is neutral, but the gap has been closing for the past 6 weeks. According to the analyst, this signals an increase in individual investor demand.
What is in the futures market?
Perpetual swaps, on the other hand, have an embedded rate that is typically charged every eight hours. These measures were created to prevent currency risk imbalances. A positive funding rate indicates that long-term (buyers) demand more leverage. However, the opposite happens when shorts (sellers) need additional leverage, causing the funding rate to turn negative. As shown below, in most cases the eight hourly rate is either zero or slightly negative. According to the analyst, if there was a corresponding risk appetite from both sides, the rate would be above 0.05 percent, which is equal to 1 percent per week.
Perpetual futures are derivatives preferred by individual traders as their price tends to follow normal spot markets. Tether premium and funding rate is going from neutral to bearish despite a 4% weekly gain. However, it should be taken into account that cryptocurrencies have been facing a 50 percent drop recently, according to Pechman, because the indicators can be a little skewed.
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