On June 15, the total market capitalization of cryptocurrencies fell to its lowest level in three months, reaching $1.02 trillion. The past few weeks have seen a bearish trend fueled by regulatory uncertainty. While Bitcoin (BTC) and BNB (BNB) saw gains of 2.5%, XRP (XRP) dropped 5.2%, and Ether (ETH) traded down 0.7%. The 10-week-long pattern has tested the support level in multiple instances, indicating that bulls will have a hard time breaking from the bearish trend while regulatory conditions have worsened across the globe.

Crypto Exchanges Facing Regulatory Scrutiny

New York-based derivatives exchange Bakkt is delisting Solana (SOL), Polygon (MATIC), and Cardano (ADA) due to recent regulatory developments in the United States. The decision follows last week’s lawsuits brought by the Securities and Exchange Commission against crypto exchanges Binance and Coinbase. On June 16, Binance was subject to a preliminary investigation in France since February 2022. The France-based arm of the crypto exchange reportedly failed to obtain an operating license and illegally offered its services to French customers. Furthermore, the exchange lacked Know Your Customer procedures, according to regulators. Binance also announced its departure from the Netherlands, with users being asked to withdraw their funds as soon as possible after the exchange failed to obtain a virtual asset service provider license.

Resilience Amid Regulatory Activity

Despite the worsening crypto regulatory environment, two derivatives metrics indicate that bulls are not yet throwing in the towel. Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. A positive funding rate indicates that longs (buyers) demand more leverage, while the opposite occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative. The seven-day funding rate for BTC and ETH is neutral, indicating balanced demand from leveraged longs (buyers) and shorts (sellers) using perpetual futures contracts. BNB was the only exception, with traders paying up to 1% per week for short bets, which can be explained by the added risks after regulatory scrutiny over the Binance exchange.

The Tether (USDT) premium measures the difference between China-based peer-to-peer trades and the United States dollar, and it is a good gauge of China-based crypto retail trader demand. Excessive buying demand tends to pressure the indicator above fair value at 100%, and during bearish markets, Tether’s market offer is flooded, causing a 2% or higher discount. The Tether premium in Asian markets fell to 99.2% after being flat since June 6, indicating moderate discomfort. Reports on June 16 regarding Tether reserves’ exposure to Chinese debt markets could have been the cause.

Derivatives metrics displayed resilience considering the strong regulatory activity aimed at crypto exchanges. Consequently, bears are yet to prove their strength if they intend to push crypto below the $1 trillion mark. Any gains above $1.12 trillion in capitalization (up 10% from the $1.02 trillion low) will likely be short-lived over the next few months. Therefore, with the Bitcoin halving still over 300 days away, the bulls are currently pinning their hopes on a Bitcoin ETF approval and/or a Federal Reserve rate cut as potential bull market catalysts.


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