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Tuesday, November 29, 2022

Derivatives Market Says Cryptocurrency’s Upside Limited To $980B 

After failing to breach its resistance extent twice, a bearish form has been strengthening on the total market cap chart. Given that the market capitalization of all cryptocurrencies has been under $1.4 trillion during the preceding 146 days, it is getting harder to justify a favorable short-term outlook for them. After two sharp rejections, a declining channel that was started in July has further restricted the upside.

The S&P 500 stock index stayed almost unchanged at $3,660 in tandem with the weekly decline of 1% in cryptocurrency markets. As the state of the world economy worsens, shipping prices have dropped by 75% from the preceding year, prompting ocean carriers to call off hundreds of journeys, which is limiting the eventual recovery.

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On the one hand, the UK government’s decision to abandon its intentions to reduce income taxes resulted in an improvement in the macroeconomic situation worldwide. On the other,  when global investment bank Credit Suisse’s credit default exchanges rose to their highest peak on October 3, investors’ anxiety escalated. The cost of these investments, which enable investors to hedge against default, has risen above levels witnessed at the height of the financial crisis in 2008.

Derivatives Market Suggest An Additional Decline

On the assumption that regulatory and governmental agencies will embrace Quant’s interoperable blockchain technology, the price of QNT increased by 15%, as one example of the derivatives market. Following the announcement of a proposal by MakerDAO to lower the stability charge for the Curve protocol staked ETH pool, MKR increased by 10.6%. Right after UniSwap Labs purportedly secured more than 100 million USD from venture investors, UniSwap Protocol increased by 10.6 percent.

However, a sole week of poor results is insufficient to understand how experienced investors are positioned. The derivatives market should be studied by those who are interested in following market indicators and Whales.

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To illustrate, the embedded rate on perpetual futures, also known as inverse swaps, is typically charged every 8 hours or so. This charge is used by exchanges to prevent exchange volatility imbalances.

Higher demand for leverage by buyers in the derivatives market is indicated by a positive funding value. The financing rate turns negative when sellers need more leverage, which is the exact reverse of the position described above.

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