Total crypto market capitalization declined at $1.13 trillion on Feb. 16, but there was no change to the one-month ascending channel structure. More importantly, this level represents a 43% gain in 2023, which is far from the $3 trillion level reached in November 2021. Still, the current recovery is remarkable.
As shown above, the rising channel started in mid-January has left some room for a 10% correction to $1 trillion without breaking the bullish formation.
Investors reacted positively to a year-over-year rise in US Consumer Price Index inflation of 5.6% on February 14 and monthly retail sales growth of 3% on February 15. Bitcoin (BTC) had the biggest positive impact on total crypto capitalization, as its price gained 12.5% โโon the week.
One area of โโconcern is a story from February 16 about Binance.US Financial Transactions to Merit Peak, a trading company managed by CEO Changpeng Zhao. Interestingly, Reuters reported that a Binance.US spokesperson said that Merit Peak โdid not trade or provide any type of service on the Binance.US platform.โ
The 10.1% weekly rise in total market capitalization was held back by BNB's modest 1.8% gains (bnb) and the XRP (XRP) Price increase of 2.5%. On the other hand, only three of the top 80 cryptocurrencies ended the week with negative returns.
Filecoin decentralized storage solution (FIL) obtained 59% and Internet Informรกtica (PCI) skyrocketed 52% as Bitcoin blockchain demand for non-fungible token (NFT) enrollment massively increased block space.
GMX rallied 34% as the protocol received $5 million in transaction fees in a single day.
Lido DAO's LDO gained 34% as participants evaluated proposals to manage the 20,300 Ether (ETH) held by the treasury of the company.
Leverage Demand Balances Out Despite Broadcast Rally
Perpetual contracts, also known as reverse swaps, have a built-in fee that is typically charged every eight hours. Exchanges use this fee to avoid currency risk imbalances.
A positive funding rate indicates that long buyers require more leverage. However, the opposite situation occurs when short sellers require additional leverage, causing the funding rate to turn negative.
The seven-day funding rate was close to zero for Bitcoin and Ether, which means that the data points to a balanced demand between long (buyers) and short (sellers) positions for leverage.
Interestingly, BNB is no longer one of the top six cryptocurrencies ranked by futures open interest, as investor demand for Polygon's MATIC (MATIC) markets rose 70% in February.
The put/call option ratio remains bullish
Traders can gauge overall market sentiment by measuring whether there is more activity through call options or put options. Generally speaking, call options are used for bullish strategies while put options are for bearish strategies.
A put-to-call ratio of 0.70 indicates that put option open interest lags the most bullish calls by 30% and is therefore bullish. Conversely, a gauge of 1.40 favors put options by 40%, which can be considered bearish.
Related: Bitcoin price derivatives look a bit overheated, but data suggests bears are outnumbered
Even though Bitcoin price failed to break the $25,000 resistance, demand for bullish call options has outpaced neutral to bearish put options since Feb. 14.
Currently, the put to call volume ratio is approaching 0.40, as the options market is more heavily populated by neutral to bullish strategies, favoring call options by 2x.
From a derivatives market perspective, there are no signs of demand from short sellers, while leverage indicators show that bulls are not using excessive leverage. Ultimately, the odds favor those who bet that the total market cap resistance of $1.13 trillion will be breached, opening up room for further gains.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
The views, thoughts and opinions expressed here are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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