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Swyftx Squawk 🦜 Is the Market Overreacting?

  • 4 minutes
  • Mar 14, 2025

  • Pav Hundal

Key Takeaways

  • Fear and Greed Index is sitting at 21 (Fear) despite US Strategic Reserve
  • Overnight US inflation data comes in lower than expected
  • Chart of the week: Exploring the correlation between global money supply and Bitcoin’s price

Sentiment couldn’t get much worse, with Fear and Greed at some of the lowest readings we’ve seen since 2023.  

Source: CoinMarketCap Crypto Fear and Greed Index 

But is everything as bad as it seems? Or are we witnessing a disconnect between market sentiment and the fundamentals? This week has delivered us a fresh round of inflation data out of the US and China that are points in an optimistic direction. More on this below.  

Not to mention the US has just signed an Executive Order to create a Bitcoin Strategic Reserve. This is arguably the largest growth catalyst for the industry since the launch of the Bitcoin Exchange Traded Funds (ETFs) in 2024.  

So if we keep seeing the fundamentals continue looking more optimistic, is the market becoming irrationally bearish in the short term?  

CPI lower than expectations 

Year-on-year inflation has fallen in the US, with the Consumer Price Index (CPI) landing in at 2.8% from last month’s reading of 3.0%.  

Policymakers have spoken in recent times that inflation needs to trend towards its 2% target before they provide any easing to the market.  

The US is in a delicate balance between fighting inflation and maintaining economic growth. Recent weak growth figures have heightened recession concerns. However, as inflation continues to fall, the Fed may soon pivot to more growth-friendly policies to prevent an economic downturn. 

The inflation narrative is global, with China now technically in a deflationary economy. Their latest CPI figures, landed on Sunday at -0.7% year-on-year.  

Chart of the week – M2 & Bitcoin 

As mentioned above, global liquidity has continued to soar. M2 is a measure of money supply among the top 21 central banks across the globe. Looking at the historical data, we can see that Bitcoin’s performance is closely correlated with the growth trend of M2. 

Since January 2025, M2 has been trending to the upside. While we understand prior performance isn’t indicative of future results, looking at the data, Bitcoin could soon start to follow these trends.  

Simply put, more money created across the global economy has meant higher prices for Bitcoin.  

Source – Bitcoin and M2 Growth Global of YoY – BGeometrics  

💱 Swyftx Flows 

The buy-to-sell ratio for unique Swyftx orders is nominally >$20,000 AUD (rolling data over the last 7 days, captured at 09:00 am AEST).  

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