March started off on a low due to a resurrection of inflationary fears. On March 7, hawkish comments from United States Federal Reserve chairman Jerome Powell amplified the market’s expectation of a 50-basis point hike in the upcoming policy rate meeting on March 22 to March 23. 

On March 8, the U.S. government’s $1 billion Bitcoin (BTC) transfer of assets seized from Silk Road sparked fears of a sell-off. Later on the same day, the largest crypto-friendly bank confirmed its collapse and planned to liquidate its crypto positions voluntarily. The week’s events sent Bitcoin to a two-week low of $20,050.

A spike in negative sentiment may preclude a bounce

The flurry of bad news and price drops caused a significant dip in CryptoQuant’s Coinbase premium index, which measures the difference in trading prices on Coinbase and Binance. Higher prices indicate stronger demand in the U.S. versus the rest of the world. The premium dipped to a two-month low on the morning of March 9 as negative news piled on.

On-chain analytics firm Santiment reported fear, doubt and uncertainty (FUD) settling in the markets, increasing the “probabilities” of contrarian price bounces during this “period of disbelief.“

However, the funding rate for BTC perpetual swaps

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Author: Nivesh Rustgi

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