Crypto Market Cap Recovers $1,000,000, Derivatives Point to Further Rise

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The total crypto market capitalization increased by 26% in seven days, reaching $1.16 trillion on March 17. Bitcoin (BTC) was the biggest gainer among the top 20 coins, up 31.5%, although some altcoins gained 50% or more during the period.

Total crypto market capitalization in USD, 12 hours. Source: Trading View

The cryptocurrency price spike happened when the US Federal Reserve was forced to lend banks $300 billion in emergency funds. According to PBS NewsHour, nearly half of the money went to failed financial institutions Silicon Valley Bank and Signature Bank and was used to pay uninsured depositors. The remaining $153 billion was obtained through a longstanding program known as the discount window, which allows banks to borrow funds for up to 90 days.

While appearing to protect the banking sector, additional funding for the Federal Deposit Insurance Corporation and credit facilitation using Fed resources is ultimately creating a false sense of confidence, according to activist billionaire investor Bill Ackman.

The $30 billion plan devised by U.S. regulators to avert a major liquidity crisis at First Republic Bank has raised more questions than it answers, said Ackman, who manages hedge fund Pershing Square. Also, Ackman said half measures don’t work when there’s a crisis of confidence.

Billionaire Warren Buffett is on the losing side of the bet

As the banking crisis deepened, Warren Buffett, the co-founder and largest shareholder of Berkshire Hathaway, a $650 billion financial conglomerate, saw his holdings deteriorate rapidly. Berkshire Hathaway, for example, is the biggest holder of shares in Bank of America, which has fallen 15.5% year-to-date. This position alone cost Buffett’s investment vehicle $5.2 billion.

Buffett, a well-known cryptocurrency critic, said he has no interest in Bitcoin even though the entire float is offered at $1,300. The 91-year-old, with a net worth of around $102 billion, claimed that Bitcoin doesn’t produce anything while farmland and residential real estate do.

However, the price of Bitcoin rose 31.5% in the six months to March 17, while Berkshire’s stock rose 5.8%. So, for now, the so-called Rat Death, as Buffett described Bitcoin, is beyond his own money management company.

$1 trillion market cap support quickly restored

Let’s take a look at the performance of the top 80 cryptocurrencies by market capitalization to see if the rise above the $1 trillion mark has bolstered investor confidence in altcoins.

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

Confluxs CFX gained 97.6% after KuCoin Ventures announced a $10 million investment in stablecoin issuer and blockchain-based payment service provider CNHC, which is available on the Ethereum and Conflux networks .

Stacks STX (STX) grew by 75.7% as the network is set to undergo an upgrade on March 20 with the introduction of Stacks 2.1, with new features and improvements.

Immutable Xs IMX rose 71.7% following the highly anticipated announcement of an upcoming partnership reveal scheduled for March 20th.

Options traders are extremely confident about market conditions

Traders can gauge market sentiment by measuring whether more activity is going through call options or put options. 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 open interest of put options lags the largest number of call options. On the other hand, an indicator at 1.40 favors puts, which is a bearish sign.

Related: Crypto Biz SVB Crashes, USDC Crashes, Bitcoin Still Up

Put-call ratio of BTC options volume. Source: Laevitas

Since March 12, demand for neutral to bullish call options has increased, indicating the growing risk appetite of derivatives traders. The move peaked on March 17, when call option volume exceeded protective put option volume by a ratio of 3:1.

The spread in favor of call options stabilized at 2:1, indicating that professional investors are not worried after the March 17 rejection of the $1.16 trillion market cap level. Ultimately, the data points to strong conviction for Bitcoin support at $26,000, so the bulls are in a better position to continue their rally.

The views, thoughts and opinions expressed herein are the sole authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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