marketsentiment

Crypto market sentiment has deteriorated to one of its weakest levels in the past four years, according to a recent research note from Matrixport. The firm stated on Tuesday that its internal sentiment gauge has dropped into deeply negative territory before showing early signs of stabilization — a shift that historically has coincided with the late stages of prolonged sell-offs in Bitcoin.
Matrixport highlighted that its 21-day moving average of market sentiment recently fell below zero and has begun to recover. While this does not confirm a bottom, the moderation of extreme bearish pressure suggests that forced selling may be gradually subsiding. However, analysts cautioned that short-term volatility and additional downside cannot be ruled out.
Extreme Fear Returns to the Market
Broader data reinforces the pessimistic backdrop. The widely followed Crypto Fear & Greed Index from Alternative.me has fallen to 10/100, signaling “Extreme Fear.” This marks the lowest level since June 2022 — a period that coincided with significant deleveraging across the digital asset sector.
Historically, such depressed readings have aligned with capitulation phases, where leveraged positions are liquidated and speculative excess is flushed out. Comparable sentiment troughs were observed in June 2024 and November 2025, both followed by periods of gradual stabilization and accumulation rather than immediate V-shaped recoveries.
The current decline in sentiment reflects months of persistent losses and weakening price momentum. The key question now circulating among traders: Has true capitulation already occurred — or is the market still in the distribution phase?
Technical Indicators Signal Rare Oversold Conditions
Frank Holmes, Executive Chairman of Hive Digital Technologies, noted that Bitcoin is currently trading nearly two standard deviations below its 20-day moving average — a statistical extreme seen only three times in the past five years.
Such deviations typically suggest that downside momentum may be overstretched. Historically, similar conditions have preceded short-term rebounds within the following 20 trading sessions. The logic is straightforward: when price extends too far from its statistical mean, normalization forces often drive a reversion.
Still, Holmes emphasized that while technical oversold signals can support short-term recovery scenarios, broader liquidity conditions and macroeconomic pressures remain critical variables.
A Five-Month Losing Streak — Longest Since 2018?
If February closes in negative territory, Bitcoin would record five consecutive months of decline — the longest losing streak since 2018. Rather than a sudden collapse, the pattern resembles a prolonged distribution phase, where confidence erodes gradually and liquidity thins.
Macro conditions have also played a role. Tighter financial liquidity, reduced risk appetite, and ongoing deleveraging in derivatives markets have contributed to weaker spot volumes and declining open interest. Sustainable bottoms typically form when:
Forced liquidations diminish
Funding rates stabilize
Open interest contracts meaningfully
Volatility compresses before expansion
Without these structural adjustments, markets often retest lower support levels before entering accumulation.
The $65,000 Psychological Level in Focus
In the short term, traders are closely monitoring Bitcoin’s ability to defend the key psychological support near $65,000. A sustained break below this level could extend corrective pressure into March. Conversely, stabilization above it may strengthen the early thesis of a developing base structure.
Matrixport maintains that while sentiment cycles often align with major turning points, precise timing remains inherently difficult — especially in fragile liquidity environments.
Final Thoughts
Extreme pessimism has historically marked inflection points in crypto markets. Yet sentiment alone is not a timing tool — it is a condition indicator. Whether this phase represents final capitulation or a transitional distribution stage will likely depend on liquidity flows, derivatives positioning, and macro stability in the weeks ahead.
What do you think — is this the bottom, or is another leg down still ahead? Drop your view below 👇
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What Is Crypto Market Sentiment?
Market sentiment reflects the overall mood, feelings, and attitudes of traders and investors toward a cryptocurrency or the market as a whole.These feelings don't always reflect an asset or project's fundamentals but can significantly influence price movements.Understanding and tracking market sentiment can help traders and investors anticipate price movements, manage risk, and make more informed decisions.
Introduction
Like all financial assets, the price of a cryptocurrency is influenced by supply and demand. These forces, in turn, are often shaped by public opinion, news, social media, and investor psychology. 
Many traders analyze the market's sentiment to predict the short and mid-term potential of a crypto asset. Along with the technical and fundamental analysis, investigating the crypto market sentiment can be a valuable addition to a trader's toolkit.
What Is Market Sentiment?
Market sentiment is the collective attitude of traders and investors towards a financial asset or market. The concept exists in all financial markets, including cryptocurrencies. Market sentiment does have the power to influence market cycles.
Still, favorable market sentiment doesn't always lead to positive market conditions. Sometimes, strong positive sentiment (it's going to the moon!) may come before a market correction or even a bearish market.
Besides providing insights into market demand, traders can analyze these sentiments to predict potentially profitable trends. Market sentiment doesn't always consider a project's fundamentals, but they might be linked sometimes.
Example: meme coins
Meme coins can help illustrate the concept of market sentiment. Let’s take Dogecoin as an example. A lot of Dogecoin's demand during its bull runs likely came from social media hype (which led to positive market sentiment). 
In other words, many traders and investors bought Dogecoin without considering the project's tokenomics or goals, but only because of the market sentiment. Even a single tweet from a figure like Elon Musk is enough sometimes to cause positive or negative market sentiment.

Bullish vs. Bearish Sentiment
Investor sentiment typically falls into two main categories:
Bullish sentiment: Traders and investors feel confident that prices will go up. When the market is bullish, people are more likely to buy and hold onto their assets, hoping to make a profit as prices rise.
Bearish sentiment: Indicates pessimism and expectations of declining prices. In bearish conditions, investors are more likely to sell off holdings or open short positions.
These two mindsets can exist at the same time in different parts of the market or among different groups of investors, which often causes price swings and uncertainty.
Why Is Market Sentiment Analysis Important?
Market sentiment analysis is an essential part of many trading strategies. For instance, this analysis can help you investigate whether FOMO is justified or simply a result of herd mentality. Overall, combining technical and fundamental analysis with market sentiment studies allows you to:
Get a better idea of short and mid-term price action.Develop better control of your emotional state. Discover potentially profitable opportunities.
How to Perform Market Sentiment Analysis
To understand the market's sentiment, you'll need to collect the market participants' views, ideas, and opinions. To get a basic feel, you might consider investigating the relevant social media pages and channels to understand what the community and investors are feeling about a certain project or the market as a whole.
You may also consider joining official forums, Discord servers, or Telegram groups to talk directly with the project’s team and community members. But be careful! There are many scammers in those groups. Don’t trust random people, and make sure to do your own research before taking risks.
On top of monitoring social channels (particularly X, given its popularity among cryptocurrency users), you might also consider the following:
Track social mentions with data collection software tools.Stay up to date with the latest industry news through media portals and blogs. Binance Blog, Bitcoin Magazine, and CoinDesk are some examples.Set alerts or track large transactions made by whales. These movements are regularly tracked by crypto investors and might have an impact on market sentiment. You can find free whale alert bots on Telegram and X (e.g., WhaleAlert).Check market sentiment indicators and pricing signals on CoinMarketCap. These indexes analyze a range of different sources and provide easy summaries of current market sentiment.Measure the level of hype surrounding a cryptocurrency with Google Trends. For example, a large search volume for “How to sell crypto,” could suggest that the market sentiment is negative.
Market Sentiment Indicators
Fear & Greed Index
The Crypto Fear & Greed Index is a popular indicator of crypto market sentiment. It shows market fear or greed on a scale of zero to 100 by analyzing different information sources, including volatility, market volume, social media, dominance, and trends.

Bull & Bear Index
The Bull & Bear Index by Augmento is a different sentiment indicator that focuses on social media. An artificial intelligence (AI) software analyzes 93 sentiments and topics using conversations on channels like X, Reddit, and Bitcointalk. The indicator value ranges from zero (bearish) to one (bullish).

Closing Thoughts
While many traders use market sentiment analysis in investment markets, it can also be useful in the cryptocurrency market. Because the blockchain industry and crypto markets are still relatively small, public perceptions and sentiment can cause volatile price fluctuations.
Market sentiment analysis tends to offer better results with more practice and experience, but it might not work in some cases. Make sure to do your due diligence before trading or investing and only risk what you can afford to lose.
Further Reading
What Is the Crypto Fear and Greed Index?The Psychology of Market CyclesFive Risk Management Strategies
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