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The entire market cap of cryptocurrencies shows strength even after the Fed rate hike and Merge

The majority of the top 80 cryptocurrencies experienced a decrease of 15% or more over the course of the previous week. Still, the Tether premium in the Asia-based futures market demonstrated that traders maintained their composure.

Photo by Alexander Grey / Unsplash

Since August, when they could not break over the resistance of the $1.2 trillion market cap, cryptocurrencies have been in a downward trend. The three-month-old climbing trend has not been broken, not even in the current bear trend and a sharp 25% drop.

Ahead of the Federal Open Markets Committee FOMC meeting (1), which agreed to raise interest rates by 0.75%, investors played it safe, causing the aggregate capitalization of the cryptocurrency markets to fall by 7.2% to $920 billion in the seven days before September 21.

The monetary authorities seek to reduce inflationary pressure while raising the cost of borrowing money and burdening corporate and consumer debt. This also explains why investors have shifted away from risky assets like the stock market, foreign exchange, commodities, and cryptocurrencies like WTI oil prices (2), which fell 6.8% from September 14 to September 14, and the MSCI China stock market index, which fell 5.1%.

As a result of the Ethereum network merge (3) and its impact on GPU-mineable coins, several altcoins worsened throughout the seven-day timeframe, while Ether (ETH) also had a 17.3% retrace. Following two successful fan token launches by the Brazilian soccer teams, VASCO and MIBR, in esports, Chilliz (CHZ) also had a 21.5% increase.

While the price of XRP increased by 16.6% following Ripple Labs' request that a federal judge rules immediately on whether the company's XRP token sales violated U.S. securities laws (4), the price of ApeCoin (APE) increased by 15% as the community anticipates the launch of the staking program, which Horizen Labs will explain on September 22.

Investors understood that increases in hash rate from Ethereum miners did not always translate into higher adoption. As a result, RavenCoin (RVN) and Ethereum Classic (ETC) retraced most of their gains from the previous week. The peer-to-peer exchanges in China and the US dollar can both be well-indicated by the OKX Tether USDT premium.

Tether's market offer is inundated during negative markets and results in a 4% or larger discount. Excessive buying demand movements pushed the indicator above fair value at 100%. The Tether premium is at 100.7%, its highest level since June 15, while remaining below the neutral area. The indicator showed a slight improvement over the previous week.

While perpetual contracts, also known as investment swaps, have an inherent cost typically charged every eight hours, the 7.2% decline in cryptocurrency markets as a result of the findings should be seen as a triumph. Exchanges use these fees to prevent imbalances in exchange risk.

A positive funding rate implies that longs (buyers) seek more leverage. In contrast, a negative funding rate shows that shorts (sellers) demand more leverage, which causes the funding rate to turn negative. All alternative currencies had negative accumulated seven-day funding rates.

This information also points to excessive demand for shorts (sellers), albeit it could be discounted in the case of Ether, given that investors seeking the free fork coins during the Merge also purchased ETH and sold futures contracts to hedge their bets (5). More crucially, during a week of a price decrease and potentially negative news from the FED, Bitcoin's funding rate also contributed to a tiny uptick.

This is regarded as a crucial choice, and investors typically wait to place additional wagers until new information is available that sheds light on how the economy is changing. Overall, given how poorly the crypto markets have done, the Tether premium and futures rate show minor symptoms of stress.