Silicon Valley Bank: Bitcoin investors panic as market goes sideways
- BTC has recorded negative funding rates for the first time this year.
- Data on the chain shows increased sales as many exit trading positions.
As the cryptocurrency market struggles with the uncertainty that awaits when banks resume operations on Monday, Bitcoins will [BTC] financing rates became negative for the first time since the start of the year, data from CryptoQuant revealed.
The BTC market has been hit by negative sentiment since the Silicon Valley Bank saga began, according to CryptoQuant’s Jay Bot. As a result, funding rates turned negative for the first time this year and have reached levels similar to those seen when FTX collapsed in November 2022.
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Funding rates are the fees traders pay to hold positions in futures markets. When the funding rate goes negative, traders pay more to hold long positions than short positions.
However, Jay Bot opined:
“If bad news dissipates and Bitcoin prices rebound, a short squeeze could occur as the overheated short positions are liquidated.”
Source: CryptoQuant
BTC bears take control as market sentiment turns sour
An on-chain assessment of BTC’s performance so far this weekend confirmed that investors have exited trading positions.
Data from Santiment revealed a spike in BTC’s Age Consumed metric in the early trading hours of March 11. Investors’ confidence dropped as the trading day progressed, causing the price of BTC to fall.
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An increase in the age consumption value of an asset indicates that many previously inactive tokens are now being transferred between addresses. This suggests that there has been a sudden and strong change in the behavior of long-term holders, who are typically known for making cautious decisions.
HODLers and experienced traders are known to be deliberate in their actions, which is why the increased activity of dormant coins often coincides with major changes in market conditions.
Moreso, an increase in age consumption followed by a price decline, as is the case here, marks the formation of a local peak, which often marks the beginning of a period of price decline.
Source: Sentiment
Furthermore, as BTC’s price fell on March 11, Exchange Inflow increased, per Santiment data.
In general, an increase in the number of coins being moved to known exchange wallets just before a local peak can indicate widespread selling.
Sometimes this selling can be too sudden and significant for the bulls to handle. However, this has not been anything out of the ordinary in BTC’s case.
Source: Sentiment
