Total Crypto Market Cap Is Down 6.9% Over the Last Week

• There is an increasing demand for bearish bets in the crypto market.
• The total crypto market cap reached a 43-day low at $940 billion on August 29.
• Traditional markets also saw prices plummet in the same time period.

The derivatives metrics seem to reflect an increasing demand for bearish bets as the total crypto market cap has seen a 6.9% drop in the last week.

From a bearish perspective, it appears that the broader crypto market entered into a wedge chart pattern, or a bearish descending channel, on August 15. This is after it failed to break above the total market cap resistance at $1.2 trillion. Despite the pattern not being clearly distinguishable, the last few weeks have not been in favor of the crypto market.

For instance, the lowest total market cap for the crypto market was seen on August 29 at $940 billion, which was the lowest in 43 days.

A steep correction in the traditional markets has accompanied the worsening conditions seen in the crypto market, as the tech-heavy Nasdaq Composite Index has declined by 12% since August 15 of this year. WTI oil prices also plummeted 11% from August 29 to September 1.

A major contributing factor to the sea of red seen in both the crypto and traditional markets is investors’ taking their profits from riskier asset classes after the Federal Reserve Chair, Jerome Powell, reiterated the bank’s commitment to contain inflation through tightening the economy.

This caused the U.S. Dollar Index (DXY) to reach its highest level in over two decades yesterday at $109.6. The risk-off attitude caused by Federal Reserve tightening has resulted in investors bracing themselves for a potential broader market correction — negatively impacting growth stocks, commodities, and cryptos. Furthermore, the crypto Fear and Greed Index peaked on August 14 as the indicator hit a neutral reading of 47/100.