Bitcoin's market sentiment has plunged to unprecedented depths, with the Fear & Greed Index signaling extreme fear as it hits a historic low of 7. Despite the downbeat mood, some contrarian investors remain optimistic, suggesting that Bitcoin's true bottom might be at $60,000.
On Monday, Bitcoin rebounded above $71,000, even as crypto market sentiment reached new lows. Analysts are divided on whether extreme fear and potential upside liquidity could help Bitcoin maintain its position above $60,000. While some foresee a bounce back, others caution that ongoing bearish trends and weak futures volumes could drive prices further down.
Key Observations:
- The Crypto Fear & Greed Index has plummeted to 7, indicating severe market anxiety.
- Over $5.5 billion in short liquidations above current prices could potentially trigger a market rebound.
- Persistent weak price trends and increased derivatives selling may still threaten Bitcoin's stability below $60,000.
Michaël van de Poppe, founder of MN Capital, notes that current sentiment indicators mirror those seen at previous market bottoms. The Crypto Fear & Greed Index hit a record low reading of 5 over the weekend, while Bitcoin's daily relative strength index (RSI) sank to 15, suggesting deeply oversold conditions. These levels were last observed during the 2018 bear market and the March 2020 COVID-19 crisis, hinting at possible recovery without an immediate revisit to $60,000.
CoinGlass data further supports the optimistic view. Bitcoin’s liquidation heatmap reveals over $5.45 billion in short positions that could be liquidated if Bitcoin's price rises by about $10,000, compared to $2.4 billion on a retest of $60,000. This suggests an upward movement might prompt a short-covering rally.
Despite these bullish signals, data from CryptoQuant shows Bitcoin trading below its 50-day moving average near $87,000 and well under the 200-day moving average around $102,000, indicating a corrective phase. The Price Z-Score is negative at -1.6, reflecting selling pressure and trend fatigue, hinting at potential for a prolonged base-building phase.
Crypto analyst Darkfost highlights increasing selling dominance in derivative markets, with a sharp negative monthly net taker volume of -$272 million and Binance’s taker buy-sell ratio dropping below 1. As futures volumes surpass spot volumes, stronger spot demand is essential for a bullish shift.
In a longer-term perspective, Bitcoin investor Jelle points out that previous bear market bottoms occurred below the 0.618 Fibonacci retracement level. For the current cycle, this level is around $57,000, with potential deeper declines towards $42,000 if history repeats itself.