Crypto Sentiment Weakens Sharply in February as Bitcoin Faces Risks of Further Downside
Crypto market sentiment has deteriorated sharply, with Matrixport’s Greed & Fear index falling to extraordinarily depressed ranges, suggesting the market could also be approaching one other inflection level.
Even so, Matrixport instructed that Bitcoin should still see draw back forward.
Sentiment Signals Possible Inflection Point For Bitcoin
In a current market replace, Matrixport stated total sentiment has dropped to excessive lows, reflecting broad-based pessimism across the digital asset house.
The agency highlighted its proprietary Bitcoin concern and greed gauge, explaining that “sturdy bottoms” have sometimes emerged when the 21-day transferring common dips beneath zero and subsequently begins to show upward. The setup appears to be in place, in response to the chart.
“This transition indicators that promoting stress is changing into exhausted and that market circumstances are starting to stabilize,” the submit learn.
The report added that, given the cyclical relationship between sentiment and Bitcoin worth motion, the most recent excessive studying could point out that the market is nearing one other potential turning point.
At the identical time, Matrixport warned that costs may continue to decline in the close to time period.
“While warning stays warranted, the present atmosphere is more and more forcing us to sharpen our focus and put together for the circumstances that sometimes precede a significant rebound,” the agency stated.
On-Chain Indicators Signal Bear Market Stress
Meanwhile, technical indicators strengthen the image of a burdened Bitcoin market. An analyst, Woominkyu, famous that the adjusted Spent Output Profit Ratio (aSOPR) has fallen again into the 0.92-0.94 vary, a zone that beforehand coincided with main bear-market stress periods.
“In 2019 and 2023, comparable readings occurred throughout deep corrective phases the place cash have been being spent at a loss. Each time, this zone represented capitulation stress and structural reset,” the submit learn.
Historically, a number of cycle lows shaped across the 0.92 to 0.93 area. The present construction, Woominkyu famous, resembles prior transitions into bear market phases relatively than routine mid-cycle pullbacks.
If the metric fails to get better above 1.0 in the close to time period, it might enhance the likelihood that Bitcoin is getting into a broader bearish part relatively than present process a easy correction.
True market bottoms, the analyst argued, are likely to kind solely after deeper compression in aSOPR, peak loss realization, and full exhaustion of promoting stress. While the market seems to be getting into a stress zone, it could not but mirror full capitulation.
“aSOPR is signaling structural deterioration. This seems much less like a dip and extra like a regime shift. The actual backside should still require deeper compression earlier than a sturdy reversal kinds,” the analyst added.
This view aligns with broader bearish projections suggesting Bitcoin could revisit levels below $40,000 earlier than forming a sturdy backside.
BeInCrypto Markets information exhibits Bitcoin is at present buying and selling round $68,000. A drop beneath $40,000 would indicate a decline of greater than 40% from present ranges, highlighting the size of draw back threat some analysts imagine stays on the desk.
For now, sentiment indicators trace at a potential turning point, however on-chain information suggests structural weak point should still must run its course earlier than a restoration can start.
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