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The total cryptocurrency market capitalization fell 5% between November 14 and November 21, reaching $795 billion. However, the general sentiment is much worse, given that this valuation is the lowest seen since December 2020.

Total crypto market capitalization in USD, 4 hours. Source: Trading View

The price of bitcoin (BTC) plunged just 2.8% on the week, but investors have little to cheer about as the current level of $16,100 represents a 66% decline since the start of the year. Even if the FTX and Alameda Research collapse has been priced in, investor uncertainty now focuses on Grayscale funds, including the $10.5 billion Grayscale Bitcoin Trust.

Genesis Trading, part of the Digital Currency Group (DCG) conglomerate, withdrawals suspended on November 16. In its latest quarterly report, the crypto derivatives and lending trading firm said it had $2.8 billion in active loans. The fund administrator, Grayscale, is a subsidiary of DCG, and Genesis acted as the liquidity provider.

The 5% weekly decline in total market capitalization was mainly impacted by Ether’s (ETH) Negative price movement of 8.5%. Still, bearish sentiment had a bigger effect on altcoins, with nine of the top 80 coins losing 12% or more over the period.

Weekly winners and losers among the top 80 coins. Source: Nomics

Litecoin (SLD) gained 5.6% after the network’s inactive addresses for a year topped 60 million coins.

Close to the NEAR protocol (NEAR) fell 23% due to concerns over the 17 million tokens held by FTX and Alameda, which backed Near Foundation in March 2022.

Decentraland’s MANA (MANA) lost 15% and Ethereum Classic (ETC) an additional 13.5% as both projects received significant investment from Digital Currency Group, controller of struggling Genesis Trading.

Demand for leverage balanced between bulls and bears

Perpetual contracts, also known as reverse swaps, have an embedded rate typically charged every eight hours. Exchanges use these fees to avoid currency risk imbalances.

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

Perpetual futures accumulated the 7-day funding rate on November 21. Source: Coinglass

The seven-day funding rate was slightly negative for Bitcoin, so the data points to excessive demand for shorts (sellers). Still, a 0.20% weekly cost to maintain bearish positions is nothing to worry about. Additionally, the remaining altcoins – with the exception of Solana’s SOL (FLOOR) – showed mixed numbers, indicating balanced demand between longs (buyers) and shorts.

Traders should also analyze options markets to understand whether whales and arbitrage desks have placed higher bets on bullish or bearish strategies.

The put/call option ratio shows a moderate uptrend

Traders can gauge overall market sentiment by measuring whether more activity is going through call options (buy) or put options (sell). Generally speaking, call options are used for bullish strategies, while put options are used for bearish strategies.

A put/call ratio of 0.70 indicates that the put option open interest lags the most bullish calls by 30% and is therefore bullish. On the other hand, an indicator at 1.20 favors put options by 20%, which can be considered bearish.

Put-call ratio of BTC options. Source: Laevitas

Even though the price of Bitcoin fell below $16,000 on November 20, investors did not rush for downside protection using options. As a result, the put-to-call ratio remained stable at around 0.54. Additionally, the Bitcoin options market remains more heavily populated with neutral to bearish strategies, as indicated by the current level favoring call options.

Derivatives data shows investor resilience given the lack of excessive demand for bearish bets based on the futures funding rate and neutral to bullish option open interest. Therefore, the odds are favorable for those betting that the $800 billion market cap support will show strength.