Matrixport Research: Bitcoin has entered a period of extreme panic; a short-term rebound is possible, but medium-term pressure continues to accumulate.

Bitcoin sentiment has recently plummeted to an extreme level of panic, unseen in nearly a decade. Superficially, this extreme pessimism is often seen as a signal of a temporary bottom, but deeper data suggests that the current downward trend is not yet over. In particular, changes in ETF holdings, the Federal Reserve's hawkish stance, and the passive, almost mechanical rebalancing and reducing of positions by institutions under pressure from losses are becoming the core factors suppressing the market. While a short-term rebound is possible, medium-term risks remain significant.

Conditions for a short-term rebound have been met, but deeper risks remain.

On-chain sentiment models and technical indicators have both fallen to extreme levels. The built-in Greed and Fear Index has fallen back to near the lower end of its measurement range, and the 20-day moving average is approaching the lowest 10% area. Historically, such readings have often been accompanied by a rebound window lasting several days to several weeks.

However, unlike the previous rebound, the triggering factors for this round of decline still exist. Key indicators that issued warnings in October have not truly reversed; some signals have even diverged from prices, indicating that structural market problems remain unresolved. Sentiment may have bottomed out, but a valid trend reversal requires stronger macroeconomic support, which is not currently visible.

ETFs were the main driver of this round of declines, and the Fed's hawkish stance intensified medium-term pressure.

Compared to sentiment, changes in ETF holdings are the key factor determining recent market trends. Since the last FOMC meeting, Bitcoin and Ethereum ETFs have seen outflows of approximately $4.1 billion and $2.1 billion respectively, with their heavy allocations this year leaving most institutions in a loss-making position. Because these investors' portfolio rebalancing behavior is highly "mechanical," continued selling during periods of policy uncertainty is a predictable outcome, prolonging structural selling pressure in the market.

The macroeconomic environment is also unfavorable. The Federal Reserve's latest meeting minutes revealed a clearer hawkish stance, with expectations for a December rate cut plummeting from 90% to 30%. Officials generally believe there is no need for immediate policy easing and are concerned that the AI-driven market may overheat. Coupled with a robust labor market, short-term easing lacks a realistic basis. Even if marginal improvements in policy occur in the future, they are more likely to happen before early 2026, rather than at present.

Overall, Bitcoin has entered a period of extreme panic. A short-term rebound driven by sentiment and technical factors is possible, but the medium-term pressure on the market still stems from deeper structural factors: ETF outflows, uncertainty surrounding Federal Reserve policy, and the continued rebalancing by institutions under loss-making conditions. Short-term traders may seek opportunities during rebounds, but a sustained upward trend still requires a warming macroeconomic environment. Truly decisive positive catalysts may not emerge until early 2026.

The above viewpoints are from Matrix on Target. Contact us to obtain the full Matrix on Target report.

Disclaimer: Investing in the market involves risks; please exercise caution. This article does not constitute investment advice. Digital asset trading can be extremely risky and volatile. Investment decisions should be made after careful consideration of your individual circumstances and consultation with a financial professional. Matrixport is not responsible for any investment decisions made based on the information provided in this content.