The panic index hits a new low, is the crypto market really turning bearish?
Bitcoin once fell to around $82,000.Author: 1912212.eth, Foresight News
Market sentiment has hit rock bottom.
In the early hours of February 27, Bitcoin failed to hold the $87,000 mark and continued to decline, dipping to around $82,000 around 4 AM, marking a new low since November 2024. Meanwhile, its fear index has dropped to 20, the lowest since 2022, with the market still in a state of extreme fear.
Ethereum, after failing to stabilize above $2,800, has been on a downward trend, recently rebounding to $2,500 before facing another setback, hitting a low of around $2,200. SOL has fallen to around $130 due to the sluggishness of memes and the negative impact of a massive unlocking on March 1, reaching a new low since September 2024.
Altcoins have shown mixed performance. According to contract data from Coinglass, $765 million in liquidations occurred across the network in the past 24 hours, with $608 million in long liquidations, and the largest single liquidation valued at $8.2054 million.
The deterioration of market sentiment has led to instability; where is the problem?
Continuous Net Outflows from Bitcoin Spot ETF Data
Bitcoin spot ETF data is an important indicator for observing market capital flows. If January showed a balance of inflows and outflows, February has seen a complete reversal. By the end of February, there were multiple instances of significant net outflows. On February 25, the single-day net outflow reached $1.14 billion, with six consecutive days of outflows from February 18 to February 25, and four consecutive days of net outflows from February 10 to February 13, three of which exceeded $150 million.
As for Ethereum spot ETFs, recent performance has also been difficult to be optimistic about. Data shows that there were four consecutive days of net outflows from February 20 to 25, and while there was a single-day net inflow of $300 million on February 4, its supportive effect on the coin price has been minimal.
Spot ETF data clearly indicates that current market participants are pessimistic about future coin prices.
Interest Rate Cuts Are Still Far Off
U.S. macro data and Federal Reserve policies continue to have a significant impact on the crypto market. The market currently expects the Federal Reserve not to cut rates in March; is there still room for rate cuts afterward?
Federal Reserve's Bostic stated that he expects two rate cuts this year, but in the context of "general" uncertainty, there could be more or fewer cuts. He anticipates that inflation will not suddenly spike, and his overall inflation expectation is a bumpy downward path. He believes inflation will move towards the 2% target, but it has not yet reached that point. The Federal Reserve's goal is to achieve the 2.0% target without harming the labor market.
Bostic noted that businesses are optimistic about deregulation but are concerned about the impacts of tariff and immigration policy changes. Additionally, he believes there are signs of easing in the labor market. Bostic stated that the current benchmark interest rate is moderately restrictive and needs to remain so. He mentioned that economic slowdown is a significant issue due to the upcoming policy shift, but businesses expect robust growth in the economy by 2025.
On February 26, the overnight financing rate options market anticipated that the Federal Reserve would cut rates twice by June, with a potential cut of about 50 basis points.
Future Market Trends
Matrixport released a chart stating
Wall Street has become an important player in Bitcoin, and Bitcoin's 60% market dominance remains a key benchmark for the crypto market, with institutional trading increasingly influencing its price movements. Concerns over the potential six-month delay of tariffs and Bitcoin strategic reserve plans proposed by Trump may be one of the reasons for the technical top formation currently appearing on the chart. From a technical analysis perspective, Bitcoin may retrace to the recent support level of $73,000.
CryptoQuant CEO Ki Young Ju stated, "If you are panic selling now, you might be a novice. A 30% pullback is common in Bitcoin bull cycles: in 2021, Bitcoin fell by 53% but still recovered and set a new all-time high."
Bitwise Europe Research Director Andre Dragosch pointed out that the crypto asset sentiment index has reached its lowest level since August, coinciding with the unwinding of yen carry trades, which caused Bitcoin to bottom out around $49,000 in August. The crypto asset sentiment index shows significant signals for contrarian buying. The overall pessimism in liquidity, on-chain data, and derivatives markets indicates that downside risks are relatively limited. At these price levels, the risk-reward outlook appears quite favorable.
