Is the cryptocurrency market about to break its 10-week losing streak?

The total cryptocurrency market capitalization fell to $1.02 trillion on June 15, its lowest level in three months. But while the resilience of the derivatives market and weekend price gains amid uncertainty over stablecoin supplies give bulls hope, it may be too early for celebration.

Crypto regulatory conditions are deteriorating

The past few weeks have seen a bearish trend fueled by regulatory uncertainty. Last week, Bitcoin (BTC) and BNB posted gains of 2.5%, but XRP fell 5.2% and Ether (ETH) fell 0.7%.

Total crypto market capitalization in USD, 1 day. Source: Trading View

Note that the 10-week pattern has tested the support level on several occasions, signaling that the bulls will find it difficult to break the downtrend as regulatory conditions have deteriorated across the globe.

For starters, New York-based derivatives exchange Bakkt is withdrawing Solana (SOL), Polygon (MATIC), and Cardano (ADA) due to recent regulatory developments in the United States. The decision follows lawsuits filed last week by the Securities and Exchange Commission (SEC) against crypto exchanges Binance and Coinbase.

Related: Why is the crypto market up today?

Most recently, on June 16, Binance has been under preliminary investigation in France since February 2022. The French branch of the crypto exchange allegedly failed to obtain an operating license and illegally offered its services to French customers. Additionally, the exchange lacked Know-Your-Customer procedures, according to regulators.

Also on June 16, Binance announced its departure from the Netherlands, with users being urged to withdraw their funds as soon as possible. The decision to exit the Dutch market came after the exchange failed to secure a Virtual Asset Service Provider (VASP) license.

Despite the worsening crypto regulatory environment, two derived metrics indicate that the bulls are not yet throwing in the towel. Nonetheless, they will likely struggle to break the bearish price formation on the upside.

Derivatives show balanced demand for BTC, ETH leverage

Perpetual contracts, also known as reverse swaps, have an embedded rate that is typically charged every eight hours.

A positive funding rate indicates that longs (buyers) require more leverage. Yet, the opposite situation occurs when shorts (shorts) require additional leverage, causing the funding rate to become negative.

Perpetual futures accumulated the 7-day funding rate on June 17. Source: Coinglass

The seven-day funding rate for BTC and ETH is neutral, indicating balanced demand for leveraged longs (buyers) and shorts (sellers) using perpetual futures.

BNB was the only exception, with traders paying up to 1% per week for short bets, which may be explained by the additional risks after a regulatory review of the Binance exchange.

Tether FUD hurts USDT premium

The Tether (USDT) premium is a good indicator of demand from China-based retail crypto traders. It measures the difference between peer-to-peer transactions based in China and the US dollar.

Excessive buying demand tends to pressure the indicator above the 100% fair value, and during bear markets the market supply of Tether is flooded, leading to a discount of 2% or more .

Tether (USDT) peer-to-peer against USD/CNY. Source: OKX

The Tether premium in Asian markets fell to 99.2% after being flat since June 6, indicating moderate discomfort. The June 16 reports of Tether’s reserve exposure to Chinese debt markets could have been the cause.

Potential Market Triggers

Derivatives metrics have shown resilience given the heavy regulatory activity targeting crypto exchanges. Therefore, the bears have yet to prove their strength if they intend to push the crypto below the $1 trillion mark.

Related: 3 Key Ether Price Metrics Point to Growing Resistance at the $1,750 Level

Despite the most recent bounce off the support level, any gains above $1.12 trillion in market cap (up 10% from the low of $1.02 trillion) are likely to be short-lived over the next few months. month.

Therefore, with the Bitcoin halving over 300 days away, bulls are currently pinning their hopes on a Bitcoin ETF endorsement and/or Federal Reserve rate cut as potential bull market catalysts.