When sentiment deviates by reality, the market usual hits speculative positions First.
It’s notable that this is exactly how the market is currently positioned. According to Unpleasant Mint glass, the market liquidated almost $140 million in short positions on 13 March, marking the second-largest short pinch since the West Asian crisis kicked out two to soften past.
From a technical perspective, the crypto market has clearly diverged from the broader macro FUD. So far this week, about $150 billion has flowed into digital assets, even with about a third of the week to go. However, as the hole between sentiment And reality continues Unpleasant broadenThe main question now is: will the crypto market continue to push in this direction?
Crypto mArkets lea degreelish ddespite ris geoppolitical risk
Market sentiment surrounding the conflict is starting to deviate from what is actually happening in practice.
According to one recent report from SantimentOptimism that the conflict between Iran, Israel and the United States could soon come to an end reached a peak on Tuesday. As the weekend approached, the social dominance associated with the word “war” began to pick up again, often alongside terms like “end.” This suggested that crypto traders may be heavily leaning towards a de-escalation narrative.
It is striking that this optimism is now also visible in the chain.
Bitcoins [BTC] The funding rate has turned positive to around 0.002, which is the strongest positive funding rate since the conflict started two weeks ago. Furthermore, this came after almost a full week of negative funding, which reflected bearish positioning in the derivatives markets.
From a technical perspective, the shift to positive financing means that traders could gradually move back into long positions, in line with growing optimism around a possible end to the conflict in the Middle East. In other words, the crypto market may view the situation as a “short-term” conflict rather than a long-term one.
However, recent developments have shown a clear difference.
According to The Kobeissi letterJust two hours after the US stock market closed, President Trump threatened to attack Iran’s Kharg Island, raising new concerns about the risk to global oil supplies.
However, so far the crypto market has largely shrugged this off. Unfortunately, as sentiment begins to diverge from recent developments, the key question now is: can a prolonged squeeze on the market test its resilience?
Reality check looms as risk assets face growing FUD
The divergence between positioning and the geopolitical background is al hit the YOU.S stock market.
From a technical point of view US stocks have been wiped out more than $2 trillion since the war began. For example, the S&P 500 ended the week with a loss of 0.61%, extending losses from the previous week’s 2.02% correction and marking its fourth straight lower low.
With President Trump’s latest threat targeting Kharg Island, Monday could have even more negative consequences. The question now is: will this spread to crypto? So far, crypto has moved in the opposite direction, with inflows of around $150 billion. That said, timing is important. Especially as market makers continue to debate whether Bitcoin has bottomed out or not.
On the one hand, Jurrien Timmerdirector of Global Macro Fidelity, sees a bottom near $60,000. On the other hand, skeptics believe that it is still too early to reach a bottom in a bear phase. According to AMBCrypto, the difference in positioning shows that crypto fundamentals remain volatile, leaving traders cautious despite the recent inflows.
Against this backdrop, the recent jump in Bitcoin funding rates indicated that its positioning is ahead of reality both geopolitically and technically, exposing the crypto market to a sudden swing. Especially as other risky assets such as US stocks remain vulnerable ahead of Monday’s session.
If this pattern holds, a prolonged squeeze could hit sentiment hard. Especially now that macro reality is finally transitioning into crypto.
Final summary
- $140 million in shorts were liquidated, $15 billion flowed into crypto assets, and Bitcoin funding rates turned positive.
- US stocks remain vulnerable after a $2 trillion loss, and new threats to Kharg Island raise the risk of a prolonged squeeze on the crypto market.