The total cryptocurrency market cap crossed $1 trillion on July 18 after a painful thirty-five-day period below the key psychological level. Over the next seven days, Bitcoin (BTC) was trading flat near $22,400, and Ether (ETH) faced a 0.5% correction to reach $1,560.
Total cryptocurrency market cap, billion USD. Source: TradingView
Total cryptocurrency capitalization closed on July 24 at $1.03 trillion, a modest move of negative 0.5% for seven days. The apparent stability is biased towards the flat performance of BTC and Ether and the $150 billion worth of stablecoins. The broader data masks the fact that seven of the top 80 coins have fallen by 9% or more in this period.
Although the chart shows support at the $1 trillion level, it will take some time for investors to regain confidence to invest in cryptocurrencies and the actions of the US Federal Reserve may have the biggest impact on price action.
Moreover, the sit-and-wait mentality may be a reflection of important macroeconomic events scheduled for next week. In general, worse-than-expected data tends to increase investor expectations for expansionary measures, which are beneficial for riskier assets such as cryptocurrency.
The Federal Reserve policy meeting is scheduled for July 26-27, and investors are expecting the US central bank to raise interest rates by 75 basis points. Moreover, the second quarter of US GDP – the broadest measure of economic activity – will be released on July 27.
A trillion dollars is not enough to instill confidence
Investor sentiment improved from July 18, as reflected in the Fear and Greed Index, a data-driven measure of sentiment. The index currently holds 30 out of 100, an increase from 20 on July 18 when it was hovering in the “extreme fear” area.
Indicator of fear and greed in cryptocurrency. Source: the alternative
One should note that despite the recovery of the total market capitalization of the trillion dollar cryptocurrency, the sentiment of the traders did not improve much. Listed below are the winners and losers from July 17-24.
Weekly winners and losers among the top 80 coins. Source: Nomex
Arweave (AR) experienced a 20.6% technical correction after a staggering 58% surge from July 12-18 after its network file sharing solution exceeded 80 Terabytes (TB) of data storage.
Polygon (MATIC) is down 11.7% after Ethereum co-founder Vitalik Buterin backed the implementation of Zero-Knowledge Rollups, a feature currently in the works at Polygon.
Solana (SOL) corrected 9% after demand for the smart contract network was negatively affected by Ethereum’s upcoming transition to a Proof of Stake consensus.
Retailers are not interested in bullish positions
The premium of OKX Tether (USDT) is a good measure of retailer demand in China. It measures the difference between peer-to-peer (P2P) trading based in China and the US dollar.
Excessive buying demand tends to pressure the index above fair value at 100%, and during bear markets, it floods Tether’s market supply and causes a discount of 4% or higher.
Tether (USDT) is peer-to-peer against USD/CNY. Source: OKX
Tether has been trading at a slight discount in the Asian peer-to-peer markets since July 4th. Not even a 25% increase in total market capitalization during the July 13-20 period is enough to show excessive buying demand from retailers. For this reason, these investors have continued to abandon the cryptocurrency market by seeking shelter in fiat currency.