The overall cryptocurrency market capitalization reached its highest stage in over two months on Jan. 13 after breaking above the $900 billion mark on Jan. 12.

Whereas the 15.5% year-to-date achieve sounds promising, the extent continues to be 50% beneath the $1.88 trillion crypto market cap seen earlier than the Terra-Luna ecosystem collapsed in April 2022.

“Hopeful skepticism” might be the very best description of most buyers’ sentiment in the mean time, particularly after the latest struggles of recapturing a $1 trillion market capitalization in early November. That rally to $1 trillion was adopted by a 27.6% correction in three days and it invalidated any bullish momentum that merchants may need anticipated.

Bitcoin (BTC) has gained 15.7% year-to-date, however a unique situation has emerged for altcoins, with a handful of them gaining 50% or extra in the identical interval. Some buyers attribute the rally to the U.S. Shopper Value Index (CPI) information launched on Jan. 12, which confirmed the thesis that inflation was persevering with to drop.

Whereas the macroeconomic circumstances may need improved, the state of affairs for cryptocurrency corporations appears gloomy. New York-based Metropolitan Business Financial institution (MCB) introduced on Jan. 9 that it will shut its crypto-assets vertical, citing modifications within the regulatory panorama and up to date setbacks within the business. Crypto-related shoppers accounted for six% of the financial institution’s complete deposits.

On Jan. 12, the U.S. Securities and Trade Fee (SEC) charged cryptocurrency lending agency Genesis World Capital and crypto trade Gemini with providing unregistered securities by means of Gemini’s “Earn” program.

A last blow got here on Jan. 13 after Crypto.com introduced a brand new wave of employees layoffs on Jan. 13, decreasing the worldwide workforce by 20%. Different crypto exchanges that lately introduced job cuts within the final month embrace Kraken, Coinbase and Huobi.

Regardless of the dreadful newsflow, the macroeconomic tailwinds favoring threat property ensured that solely UNUS SED (LEO) closed the primary 13 days of 2023 within the pink.

Lido DAO (LDO) gained 108% as buyers anticipate the upcoming Ethereum Shanghai improve that allows staked Ether withdrawals to spice up the demand for liquid staking protocols.

Aptos (APT) rallied 98% after some decentralized purposes began to choose up quantity, together with Liquidswap DEX, Ditto Finance staking and yield and NFT market Topaz Market.

Optimism (OP) gained 70% after the layer-2 community picked up exercise and, mixed with its competitor Arbiturm, surpassed Ethereum’s fundamental chain transactions.

Leverage demand is balanced between bulls and bears

Perpetual contracts, also called inverse swaps, have an embedded fee that’s often charged each eight hours. Exchanges use this charge to keep away from trade threat imbalances.

A optimistic funding fee signifies that longs (patrons) demand extra leverage. Nevertheless, the alternative state of affairs happens when shorts (sellers) require extra leverage, inflicting the funding fee to show unfavourable.

The 7-day funding fee was close to zero for Bitcoin and altcoins, which means the information factors to a balanced demand between leverage longs (patrons) and shorts (sellers).

If bears are paying 0.3% per week to keep up their leveraged bets on Solana (SOL) and BNB, that provides as much as a mere 1.2% monthly — which isn’t related for many merchants.

Bitcoin worth rallies to $19K, however analyst says a $17.3K retest might occur subsequent

Merchants’ demand for neutral-to-bullish choices has spiked

Merchants can gauge the market’s total sentiment by measuring whether or not extra exercise goes by means of name (purchase) choices or put (promote) choices. Usually talking, name choices are used for bullish methods, whereas put choices are for bearish ones.

A 0.70 put-to-call ratio signifies that put choices open curiosity lag the extra bullish calls by 30%, which is bullish. In distinction, a 1.40 indicator favors put choices by 40%, which will be deemed bearish.

Between Jan. 4 and Jan. 6, the protecting put choices dominated the area because the indicator soared above 1. The motion finally light and the alternative state of affairs emerged because the demand for neutral-to-bullish name choices has been in extra since Jan. 7.

The dearth of leverage shorts and demand for protecting places factors towards a bull development

Contemplating the 15.7% achieve for the reason that begin of 2023, derivatives metrics mirror zero indicators of demand from leverage shorts or protecting put choices. Whereas bulls can rejoice that the $900 billion complete market capitalization resistance confronted little resistance, derivatives metrics present bears are nonetheless patiently ready for an entry level for his or her shorts.

Contemplating the market’s bearish newsflow, bulls’ fundamental hope stays solely within the framework of a good macroeconomic setting, which largely depends upon how retail gross sales information stories subsequent week.

China can be anticipated to launch its financial figures on Jan. 16 and the U.S. will do the identical on Jan. 18. One other potential influence on worth could possibly be the UK’s CPI print which is ready to be introduced on Jan. 18.

The views, ideas and opinions expressed listed here are the authors’ alone and don’t essentially mirror or symbolize the views and opinions of Cointelegraph.

This text doesn’t comprise funding recommendation or suggestions. Each funding and buying and selling transfer includes threat, and readers ought to conduct their very own analysis when making a call.