The total cryptocurrency market cap fell by 8.1% in the past two days after failing to break the $880 billion resistance on December 14.

The rejection did not invalidate the 4-week upward channel, but a weekly closing below $825B would confirm the shift to the lower band and reduce the support level to $790B.

Total cryptocurrency market capitalization in USD, 12-hour period. Source: TradingView
Investors’ overall sentiment towards the market remains bearish, with year-to-date losses of 66%. Despite this, Bitcoin
BTC

cursors down
$16,747

The price fell by only 2% during the week, reaching the $16,800 level at 17:00 UTC on December 16.

A very different scenario has emerged of cryptocurrencies under pressure due to pending regulations and fears that major exchanges and miners are insolvent. This explains why the total market capitalization has decreased by 4.7% since December 9th.

According to court documents filed on December 15, the US trustee declared the committee responsible for part of FTX’s bankruptcy proceedings. These include Wintermute Asia, a leading market maker, and GGC International, an affiliate of distressed lending platform Genesis. Investors remain in the dark as to who are the biggest creditors from the failed FTX exchange group and this fuels speculation that the contagion could continue to spread.

On December 15, the Dutch central bank issued a warning to investors using KuCoin, saying that the exchange was operating without legal registration. De Nederlandsche Bank added that the crypto company was “illegally providing services” and “illegally offering custodial wallets” to users.

Adding to the drama, on December 16, Mazars Group, a company known for proof-of-stake audit services for crypto firms, removed recent documents detailing exchange audits from its website. The company was previously appointed as the official validator for Binance’s Proof of Reserve updates, a move followed by KuCoin and Crypto.com.

The bitcoin mining sector has also suffered due to a strong correction in cryptocurrency prices and rising energy costs. Listed mining company Core Scientific has been offered a $72 million emergency line of credit to avoid bankruptcy. The financial lender is requesting that all payments to equipment lenders at Core Scientific be suspended while Bitcoin remains below $18,500.

The weekly decline of 4.7% in the total market capitalization was mainly affected by the capitalization of Ether
ETH

cursors down
1185 USD

5.4% negative price move for BNB
BNB

cursors down
$241

which was trading down 15.1%. As a result, bearish sentiment has weighed heavily on altcoins, with 14 of the top 80 altcoins dropping 12% or more in the period.

Weekly winners and losers among the top 80 coins. Source: Nomex
The Open Network (TON) gained 30% after Telegram launched bidding on anonymous phone numbers sold for TON tokens.

Bitcoin SV (BSV) rose 11.7% after Craig Wright, self-proclaimed Satoshi Nakamoto and altcoin project leader, pleaded for his loss in the Norwegian courts.

Trust Wallet (TWT) saw a 27.2% correction after its parent company (Binance) faced $1.9 billion in withdrawals within 24 hours.

The demand for leverage is balanced between bulls and bears
Currently, the data shows that the demand for leverage is divided between bulls and bears.

Perpetual contracts, also known as reverse swaps, have a built-in rate that is usually charged every eight hours. Exchanges use these fees to avoid imbalances in exchange risk.

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

Perpetual futures contracts accumulated at a 7-day funding rate on December 16th. Source: Coinglass
The 7-day funding rate was close to zero for Bitcoin and altcoins, which means that the data indicates that there is a balanced demand between longs (buyers) and shorts (sellers) in this period.

Traders should also analyze the options markets to understand whether whale and arbitrage desks are placing higher bets on bullish or bearish strategies.

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