Author: 1912212.eth, Foresight News
Market sentiment has plummeted to an all-time low.
In the early hours of February 27, Bitcoin failed to hold the $87,000 level and continued to slide, even briefly dipping to around $82,000 in the early hours, marking a new low since November 2024. At the same time, its fear index has dropped to 20, a new low since 2022, and the market remains in a state of extreme fear.
Ethereum failed to stabilize above $2,800 and has since slid further, recently rebounding to $2,500 before being hit again, with the lowest point reaching around $2,200. SOL, affected by the waning meme and the negative impact of the massive unlocking on March 1, has fallen to around $130, a new low since September 2024.
Altcoins have seen mixed performance. In terms of contract data, according to Coinglass, the 24-hour total network open interest liquidation was $765 million, with long positions accounting for $608 million, and the largest single liquidation value was $8.205 million.
The deteriorating market sentiment and unstable morale, where is the problem?
Bitcoin Spot ETF Data Continues to Show Net Outflows
Bitcoin spot ETF data is an important indicator for observing market capital flows. While the inflows and outflows were balanced in January, the situation completely reversed in February. By the end of February, there were even multiple instances of large net outflows. On February 25, the single-day net outflow reached $1.14 billion, and from February 18 to 25, there were 6 consecutive days of capital outflows, while from February 10 to 13, there were 4 consecutive days of net outflows, 3 of which exceeded $150 million.
For Ethereum spot ETFs, the recent performance has also been difficult to be optimistic about. Data shows that from February 20 to 25, there have been 4 consecutive days of net outflows, and on February 4, there was a single-day net inflow of $300 million, but the supporting effect on the coin price was minimal.
The spot ETF data clearly shows that current market participants have a pessimistic sentiment about the future coin price.
Interest Rate Cuts Remain Distant
Macroeconomic 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 interest rates in March, so is there still room for further rate cuts?
Federal Reserve official Bostic stated that he expects two rate cuts this year, but with the "widespread" uncertainty, there could be more or fewer rate cuts. He expects inflation not to suddenly explode, and his overall inflation forecast is a bumpy downward path. He believes inflation will move towards the 2% target, but has not yet reached it. The Federal Reserve's goal is to achieve the 2.0% target without harming the labor market.
Bostic said businesses are optimistic about deregulation, but are concerned about the impact of changes in tariff and immigration policies. 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 be maintained. He said that economic slowdown is a major issue due to the upcoming policy changes, but businesses expect the economy to grow steadily by 2025.
On February 26, the overnight indexed swap market expected the Federal Reserve to cut rates twice by June, with a potential rate cut of around 50 basis points.
Outlook for the Future
Matrixport released a chart stating that
Wall Street has become an important player in Bitcoin, and Bitcoin's 60% market dominance is still the key benchmark for the crypto market, with institutional trading behavior increasingly influencing its price trend. Concerns about the potential six-month delay in Trump's proposed tariffs and Bitcoin strategic reserve plan may be one of the reasons for the current technical top formation on the chart. From a technical perspective, Bitcoin may retrace to the recent support level of $73,000.
Ki Young Ju, CEO of CryptoQuant, said, "If you're panic selling now, you're probably a newbie. 30% corrections are common in Bitcoin bull market cycles: Bitcoin fell 53% in 2021 but still recovered and hit a new all-time high."
Andre Dragosch, Head of Research at Bitwise Europe, pointed out that the Crypto Asset Sentiment Index has reached its lowest level since August, coinciding with the unwinding of the Yen carry trade, which led Bitcoin to bottom around $49,000 in August. The Crypto Asset Sentiment Index is showing a strong contrarian buy signal. The widespread pessimism in liquidity, on-chain data, and the derivatives market suggests that downside risks are relatively limited. At these price levels, the risk-reward outlook appears quite favorable.
