The total market capitalization of cryptocurrencies fell to $1.02 trillion on June 15, the lowest level in three months. But while the resilience of the derivatives market and price gains at the end of the week amid uncertainty in stablecoin reserves provides hope for bulls, it may be too early to celebrate.

Cryptocurrency regulatory conditions are worsening

In recent weeks, we have seen a bearish trend fueled by regulatory uncertainty. Last week Bitcoin (BTC) a BNB posted a 2.5% gain but XRP decreased by 5.2% and ether (ETH) fell by 0.7%.

Total cryptocurrency market capitalization in USD, 1 day. Source: TradingView

Note that the 10-week pattern has tested the support level on numerous occasions, signaling that bulls will have a hard time breaking out of the bearish trend while regulatory conditions have worsened globally.

To begin with in New York derivatives exchange Bakkt is delisting Solana (SALT), polygon (MAT) and Cardano (ADA) due to recent regulatory developments in the United States. The decision follows last week’s Securities and Exchange Commission (SEC) lawsuits against crypto exchanges Binance and Coinbase.

Related: Why is the crypto market up today?

Recently, on June 16, Binance was the subject of a preliminary investigation in France since February 2022. The French branch of the crypto exchange allegedly did not obtain an operating license and was illegally offering its services to French customers. Furthermore, there was no exchange Know your customer procedures, according to regulators.

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

Despite the deteriorating crypto regulatory environment, two derivatives metrics suggest that bulls are not throwing in the towel just yet. However, they will probably have a hard time breaking the bearish price formation to the upside.

Derivatives show balanced demand for BTC, ETH leverage

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

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

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

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

The only exception was BNB, where traders paid up to 1% per week for short bets, which can be explained by the added risks after the regulatory review of the Binance exchange.

Tether FUD hurts USDT premium

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

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

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

Tether’s premium in Asian markets fell to 99.2% after being stagnant since June 6, suggesting some discomfort. News June 16 at Exposure of Tether Reserves to Chinese Debt Markets could be the cause.

Potential market triggers

Derivatives metrics showed resilience in light of strong regulatory activity targeting crypto exchanges. As a result, the bears have yet to prove their strength if they are going to push the crypto below the $1 trillion mark.

Related: 3 key ether price metrics point to rising resistance at $1,750

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

Hence with bitcoins halving still more than 300 days, the bulls are currently pinning their hopes on a Bitcoin ETF Approval and/or a Federal Reserve rate cuts as potential bull market catalysts.