In the last two weeks, cryptocurrency markets have been trading within a narrow 7.1% range, as investors are hesitant to place new bets due to the need for additional regulatory clarity, primarily in the United States. The total crypto market capitalization saw a 1% decrease to $1.2 trillion, with Bitcoin’s price falling by 1.1%, Ether’s dropping by 0.2%, and BNB trading down 1.4%.
This stagnant trend is not unique, as a similar range was observed for twelve days between March 29 and April 10. Regulatory uncertainty may be a factor in this lack of risk appetite, while simultaneously, the banking crisis is pushing prices upward.
Coinbase exchange, for example, has been caught up in a regulatory battle with the U.S. Securities and Exchange Commission (SEC) over the need for clear rules for trading digital assets. With a recent court decision in favor of Coinbase, the SEC has been instructed to clarify the security rules for digital assets within ten days.
However, the banking crisis remains a concern with lender PacWest Bancorp reportedly considering a buyout. A significant portion of PacWest’s $40 billion in assets is in commercial real estate loans and residential mortgages, a sector burdened by rising interest rates.
Investors may be waiting for clarity on whether the U.S. Treasury will continue injecting liquidity to contain the banking crisis which, in turn, would favor inflation and create positive momentum for scarce assets such as cryptocurrencies.
An analysis of the funding rate for Bitcoin and Ether indicates a balance between leveraged longs (buyers) and shorts (sellers) using perpetual futures contracts. This balance suggests that investors are not being enticed by the current market conditions to place additional bets.
The put-to-call ratio for Bitcoin options volume reveals a preference for neutral-to-bullish call options. This preference indicates that professional traders are not predicting a crypto price crash, as demand for protective put options remains low.
As it stands, it’s uncertain whether the total market capitalization will breakthrough the $1.22 trillion barrier. Currently, traders appear to be awaiting further regulatory clarity and the U.S. Treasury’s plan for addressing the troubled regional bank sector.
While certainty eludes the market, one fact stands out: professional traders do not seem to be betting on an imminent crypto price crash given the subdued demand for protective put options. As the situation unfolds, diligent research and risk assessment will be essential for investors in these volatile markets.