Analysis: Extreme Market Panic May Signal Approaching Phase Inflection Point

Odaily News According to a report by Cointelegraph, current crypto market sentiment has fallen to an "extremely depressed" level, potentially nearing the formation of a "lasting bottom," with selling pressure possibly gradually exhausting.

Bitcoin's "Fear and Greed Index" shows that when the 21-day moving average falls below the zero line and then turns upward again, it often corresponds to a phase bottom, and a similar signal has currently appeared. This typically means selling momentum is weakening and market conditions are beginning to stabilize. However, the institution also cautioned that prices may still decline further in the short term, but historical experience suggests that extreme negative sentiment zones often provide relatively attractive entry windows.

Meanwhile, the "Fear and Greed Index" compiled by Alternative.me reads 10 (out of 100), placing it in the "Extreme Fear" zone, a low not seen since June 2022. Frank Holmes, Chairman of Hive, stated that Bitcoin's current price is approximately two standard deviations below its 20-day moving average, a situation that has only occurred three times in the past five years. Historical data indicates that in similar extreme oversold environments, a technical rebound is more likely to occur within the subsequent 20 trading days.

If Bitcoin closes lower in February, it will mark its fifth consecutive monthly decline, one of the longest losing streaks since 2018. The market is watching whether extreme sentiment and technical oversold signals will jointly drive the formation of a new inflection point.