The upside is set at $980 billion of the total cryptocurrency market, according to derivatives metrics

It is becoming increasingly difficult to support a bullish short-term view of cryptocurrencies as the total cryptocurrency market cap has been below $1.4 trillion over the past 146 days. Moreover, the descending channel that started in late July limited the upside after two strong rejections.

Total cryptocurrency market cap, in US dollars. Source: TradingView

The negative 1% weekly performance in the crypto markets was accompanied by a slump in the S&P 500 stock market index, which was essentially flat at 3650. Uncertainty continues to limit the eventual recovery as deteriorating global economic conditions triggered the Pacific Transit Zone Shipping rates to a 75% decline compared to the previous year, forcing shipping companies to cancel dozens of sailings.

Conflicting Macroeconomic Signals Limit Risk to Market Upside

On the one hand, the global macroeconomic scenario improved after the UK government reinstated its plans to cut income taxes on October 3. Meanwhile, investor fear increased as global investment bank Credit Suisse credit default swaps reached their highest levels in October. 3. These instruments allow investors to protect against default, and their cost has exceeded levels seen at the height of the 2008 financial crisis.

Here is a list of the winners and losers of the 1% cryptocurrency market cap. Loss to $935 billion. Bitcoin (BTC) gained 1%, bringing its dominance ratio to 41.5%, the highest since August 5.

Weekly winners and losers among the top 80 coins. source: Nomex

Quantity (QNT) jumps 15% amid speculation that an interoperable blockchain protocol will find it Adoption through government and regulatory agencies.

Maker (MKR) gained 10.6% after MakerDAO launched a proposal to cut Stability fee For the ether stacked curve protocol (ETH) Swimming pool.

The UniSwap (UNI) protocol has gained 10.6% after UniSwap Labs, a startup that is contributing to the protocol, it is reported. Raised over $100 million of the owners of capital.

However, one week of negative performance is not enough to explain how professional traders put up. Those interested in tracking whales and market markers should analyze derivatives markets.

Derivatives markets point to further decline

For example, perpetual futures contracts, also known as reverse swaps, have an embedded rate that is typically charged every eight hours. Exchanges use these fees to avoid misalignments in exchange risk.

A positive funding rate indicates that longer contracts (buyers) require more leverage. However, the opposite situation occurs when short positions (sellers) require additional leverage, causing the financing rate to turn negative.

Accumulated future funding rate for 7 days on October 3rd. Source: Coinglass

The permanent contracts reflected the neutral sentiment as the accrued funding rate has been relatively flat in most cases over the past seven days. The only exception was Ether Classic (etc.), although the 0.50% weekly cost of maintaining a short (bearish) position should not be considered relevant.

Since September 26, US 5-year Treasury yields have fallen from 4.2% to 3.83%, indicating that investors are demanding lower yields for holding highly secure assets. The flight to quality shows how risk-averse traders are as mixed sentiment emerges from lackluster economic indicators and corporate earnings.

For this reason, the bears believe that the dominant long-term bearish formation will continue in the coming weeks. In addition, the lack of interest of professional traders to capitalize on the buying (buying) of cryptocurrencies is evident in the neutral futures funding rate. Thus, the resistance of the current market capitalization of $980 billion should remain strong.