The cryptocurrency market has performed well over the past week, but two key pieces of information point to a brief cooling-off period.
The total crypto market capitalization reached its highest close in three months on April 3 at $2.23 trillion, but the return between March 28 and April 4 was a 1.9% gain. During this time, Bitcoin (BTC) posted a negative 2.6% return, although that was more than offset by gains from altcoins.
While Ether (ETH) and Binance Coin (BNB) gained less than 3% over the last seven days, a handful of mid-cap altcoins managed to gain 20% or more.
On April 1, the Bitcoin network difficulty reached an all-time high of 28.587 billion. The indicator correlates with the computational power required to mine BTC blocks, currently at an estimated hash rate of 201.8 exhash per second (EH/s).
However, on the same day, the United States Securities and Exchange Commission officially disapproved the ARK 21Shares Bitcoin exchange-traded fund (ETF) application. The regulator argued that Cboe BZX Exchange had not complied with the requirements to list a financial product under its rules of practice and those of the Exchange Act.
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Zilliqa (ZIL) rallied 56% after reports that it will launch a metaverse platform as a service in April. According to a press release, Metapolis of Zilliqa is being built using Nvidia Omniverse 3D in real-time. Nvidia is a $684 billion Nasdaq-listed producer of graphics processing power (GPUs).
Aave (AAVE) gained 38% after the launch of Aave v3, announced on March 16. The new features intend to provide greater capital efficiency, increased security, and cross-chain functionality. The non-custodial liquidity protocol allows users to lend, borrow or stake their assets to earn a return on their holdings.
Synthetix (SNX) rallied 28% after its Debt Pool Synthesis implementation was scheduled for April 7. Currently, the decentralized finance protocol operates debt pools on two Ethereum chains: the main net and the Optimism layer 2 scaling solution. By moving to an “optimism native protocol”, the app will merge your pools to maximize liquidity.
Apecoin (APE) faced a natural correction after a 60% gain between March 21 and 28, as the company behind it raised $450 million in a funding round led by Andreessen Horowitz. Yuga Labs, the creator of the Bored Ape Yacht Club (BAYC), launched APE as a utility and governance token that allows its holders to monitor and manage the so-called ApeCoin DAO.
Tether Premium Shows Slight Deterioration
Tether (USDT) premium on OKX is a good indicator of crypto demand from China-based retail traders. It measures the difference between peer-to-peer transactions based on China and the US dollar.
Excessive buying demand tends to push the indicator above 100% fair value, and during bear markets, Tether’s market supply is flooded causing a discount of 4% or more.
Tether reached 99.2% on April 2, its lowest level since January 26. While this is far from panicky retail sales, the gauge showed modest deterioration over the past week.
The lack of retail demand is not particularly worrisome, even as the total cryptocurrency market capitalization surpassed $2 trillion and the gauge is down 19% since December 2021.
Futures Markets Show Mixed Sentiment
The total market capitalization increased 26% in three weeks, from $1.67 trillion to $2.1 trillion on April 4. However, derivatives indicators show no signs of improvement, leaving investors wary. Until sentiment improves, the odds of a negative price correction remain high.
By Audy Castaneda
