Bitcoin Investor Sentiment Index Hits Record Low — Sign of Further Plunge or Imminent Rebound?

▲ Bitcoin (BTC)

Bitcoin (BTC) investor sentiment has plunged to a record low, with analysts suggesting the market has reached a critical inflection point.

According to cryptocurrency media outlet BeInCrypto on Feb. 17 (local time), digital asset financial services firm Matrixport said in a recent report that its proprietary Bitcoin Greed and Fear Index is reflecting extreme pessimism. Matrixport explained that in the past, meaningful Bitcoin bottoms formed when the 21-day moving average of the sentiment index fell below zero and then rebounded. While current indicators suggest conditions for a bottom are forming, the firm noted that short-term downside risks still remain.

On-chain metrics also reveal structural weaknesses and strong pressure within the Bitcoin market. Crypto analyst Woominkyu stated that the adjusted Spent Output Profit Ratio (aSOPR) has dropped into the 0.92 to 0.94 range. This zone aligns with levels seen during major bear markets in 2019 and 2023, when capitulation buying occurred and the market underwent structural resets. The analyst warned that current data may signal not just a correction but the onset of a full-fledged bear market.

Looking at past cases, Bitcoin formed true bottoms only after sell-off pressure peaked and sellers were fully exhausted. Woominkyu added that if the aSOPR indicator fails to recover above 1.0 in the near term, Bitcoin is likely to enter a deeper downturn beyond a simple correction. He cautioned that the market may not yet have reached a full capitulation phase, where investors completely abandon their positions.

Some experts have presented bearish outlooks, suggesting Bitcoin could fall below $40,000 before establishing a sustainable bottom. Given that Bitcoin is currently trading around $68,000, this would imply a decline of more than 40% from current levels. While the sentiment index signals a potential rebound, actual on-chain data indicates that more time may be needed before the downtrend fully concludes.

Ultimately, Bitcoin remains on an uncertain trajectory where extreme fear intersects with structural weakness. Financial experts advise investors to focus on risk management rather than viewing the current psychological low as an opportunity, at least until tangible improvements in market fundamentals are confirmed. As the painful process of bottom formation continues, global investors are watching closely to see whether Bitcoin can withstand unprecedented selling pressure and lay the groundwork for a renewed rally.

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