Investor sentiment in the cryptocurrency market has slid to historically low levels, with Matrixport estimating that Bitcoin may be approaching a potential bottom zone. The analysis points out that a series of sentiment indicators and technical signals are converging at levels that have historically been associated with market capitulation phases.
Sentiment index in extreme fear zone
According to Matrixport, the 21-day moving average of its internal investor sentiment index has fallen below 5%—a level that has historically coincided with local market lows. At the same time, the market appears to be stabilizing without a significant recovery in trading volumes. The key points of the analysis include the following: the 21-day moving average of sentiment fell below 5%; the Crypto Fear & Greed Index is in the "extreme fear" zone; and similar indications have appeared in the past during mass liquidation phases. The firm emphasizes that these levels reflect widespread pessimism and intense selling pressure; however, it does not predict an immediate upward reaction, but rather a zone where sellers may gradually become exhausted.
Technical outlook: A rare oversold condition
Beyond the general climate, Matrixport focuses on the technical formation of Bitcoin. According to the analysis, BTC is trading approximately two standard deviations below its short-term moving average—a rare condition historically identified with oversold markets. The firm estimates that such a setup "could open the way for a recovery," but warns that price weakness may persist in the short term. Furthermore, in the event of a negative monthly close, Bitcoin will record its fifth consecutive month of decline—a sequence reminiscent of the most difficult phases of the 2018 bear market. This prolonged downward momentum intensifies psychological pressure and fuels a climate of distrust.
Turning point or trap?
The convergence of extreme fear and oversold technical indicators outlines a statistically "sensitive" zone for the crypto market. However, as emphasized, such signals do not guarantee an immediate trend reversal. Instead, they signal a potential turning point, where the historical experience of Bitcoin cycles calls for investors to exercise increased caution, composure, and careful risk management.
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