Crypto market cap down to $840 billion in 7 days

Data have shown that the total crypto market capitalization fell 1.5 percent to $840 billion over the last seven days, with the sentiment remaining bearish.

The biggest weights were Ether (ETH) and Binance's native coin, BNB. ETH was down three percent, while BNB fell by 2.5 percent. Bitcoin (BTC), as the token with the largest capitalization, fell by 0.8 percent. BTC managed to stabilize on Thursday morning at $16,800 before breaking the $17,200 point later that day.

The downfalls faced by major tokens affected altcoins as well, with 10 of the top 80 coins falling by at least eight percent. DOGE’s seven-day cumulative value was down 0.04 percent at Binance. 1INCH plunged 15.2 percent after the issuer unlocked 15 percent of its supply at the beginning of December as proof of commitment to its 4-year vesting schedule.

Meanwhile, WAVES was down more than 11 percent just on Thursday. The WAVES-backed stablecoin, USDN, was also 16 percent below the peg.

Three altcoins, however, posted double-digit gains last week. Trust Wallet (TWT) grew by 18.6 percent as the provider secured market share through the browser extension wallet Start in November.

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Chainlink (LINK) gained 10.1 percent after opening early access for its staking program. Axie Infinity (AXS) posted a 17.6 percent growth, indicating that investors had managed their expectations after an 89 percent correction since the first quarter of this year.

Analysts noted that the leverage demand was balanced despite the drop in overall market valuation. They used data from the exchanges, particularly perpetual contracts — also known as inverse swaps. The contracts help exchanges avoid imbalances in rate risk because they have an embedded rate, usually calculated every eight hours.

When perpetual prices are higher than mark prices — when buyers demand more leverage — the exchange sees a positive funding rate. Meanwhile, a negative funding rate refers to a situation when perpetual prices are lower than mark prices. Usually, it happens when short sellers require more leverage.

The seven-day funding rate for BTC and altcoins across exchanges was near zero, indicating balanced demands between buyers and sellers.

Analysts also suggested traders pay attention to the options markets to detect the movements of crypto whales and arbitrage desks. According to the put-to-call ratio, the options market indicated a moderate uptrend.

The put-to-call volume ratio was close to 0.40, meaning that 60 percent of investors favored call (buy) options. Despite BTC’s failure to pass the $17,500 mark on December 5, the demand for downside protection from options only increased momentarily.

The futures market has also shown signs of upward movements. Although the altcoin market capitalization went down by two percent, the derivatives metrics did not show signs of a decline. Despite BTC’s failure to break the resistance point on Monday, demand for futures leverage for the token also remained balanced.

Analysts added that the crypto market capitalization needed to break the $875 billion resistance. After reaching that point, the market is expected to see some bullish actions.

Crypto regulation

Regulatory pressures from around the globe contribute to the decline of cryptocurrencies. Lawmakers paid more attention to the industry after the implosion of the crypto exchange FTX in November. The concerns were particularly related to the bankruptcy’s impact on traditional finance and the lack of protections for retail consumers.

The Financial Crimes Enforcement Network (FinCEN) said it was looking into the roles of decentralized finance in reducing the need for financial intermediaries, increasing the risks of money laundering. Meanwhile, Australian regulators said they despise the vulnerability of stablecoins, highlighting the Terra-Luna collapse earlier this year.