The panic index hits a new low, is the crypto market really turning bearish?

Author: 1912212.eth, Foresight News

Market sentiment fell to freezing point.

In the early morning of February 27, Bitcoin did not hold its $87,000 position and continued to decline again. It even fell to around $82,000 at around 4 a.m., setting a new low since November 2024. Meanwhile, its panic index has dropped to 20, a new low since 2022, and the market is still in a state of extreme fear.

Ethereum declined all the way after failing to stabilize at US$2,800. It recently rebounded to US$2,500 and suffered another setback, with a low of around US$2,200. SOL has fallen to around $130 due to the negative effects of meme sluggishness and the huge unlocking on March 1, hitting a new low since September 2024.

Altcoins have risen and fallen. In terms of contract data, according to coinglass, the open contracts on the entire network were liquidated in 24 hours, and the long positions were liquidated in US$608 million, and the largest single liquidation was valued at US$8.2054 million.

Market sentiment worsens and morale is unstable. What is the problem?

Bitcoin spot ETF data continues to appear net outflow

Bitcoin spot ETF data is an important indicator for observing market funds. If the inlet and exit were balanced in January this year, and by February, the situation completely reversed. At the end of February, there were even large net outflows many times. On February 25, the net outflow of a single day reached US$1.14 billion, from February 18 to February 25, there were continuous outflows of funds on the 6th, and from February 10 to February 13, there were four consecutive days of net outflows, and the net outflow of a 3-day exceeded US$150 million.

In terms of Ethereum spot ETFs, the recent performance is also difficult to be optimistic. Data shows that from February 20 to 25, there have been net outflows for four consecutive days, and a net inflow of US$300 million on February 4, but the support effect on the currency price is very little.

Spot ETF data clearly show that market participants are currently pessimistic about the subsequent currency price.

Rate cuts are nowhere to go

US macro data and Fed policies still have a great impact on the crypto market. The market currently expects the Federal Reserve to cut interest rates in March, so is there still room for interest rate cuts in the future?

Fed Bostic said he expects two rate cuts this year, but more, and fewer, may occur in the context of "universal" uncertainty. He expects inflation will not explode suddenly, and his overall inflation expectations are a bumpy downward path. He believes inflation will move towards the 2% target, but has not yet arrived. The Fed aims to reach its 2.0% target without damaging the labor market.

Bostic said businesses are optimistic about deregulation but are concerned about the impact of changes in tariffs and immigration policies. Furthermore, he believes there are signs of easing in the labor market. Bostic said the current benchmark interest rate is moderately restrictive and needs to be maintained. He said the slowdown is a major issue due to the upcoming policy shift, but businesses expect steady growth in 2025.

On February 26, the guaranteed overnight financing rate option market expects the Federal Reserve to cut interest rates twice by June, with potential interest rate cuts of about 50 basis points.

Follow-up market trends

Matrixport released the chart

Wall Street has become an important player in Bitcoin, and 60% of Bitcoin's market dominance remains a key benchmark for the crypto market, and institutional trading behavior is increasingly affecting its price trend. Concerns about the potential delay of Trump's proposed tariffs and Bitcoin strategic reserve plans for six months may be one of the reasons for the technical top patterns on the current chart. From a technical perspective, Bitcoin may retreat to its recent support level of $73,000.

"If you sell in panic now, you may be a newbie. A 30% pullback is common in the Bitcoin bull cycle: Bitcoin fell by 53% in 2021, but it still recovered and hit an all-time high.

Andre Dragosch, research director at Bitwise Europe, noted that the crypto-asset sentiment index reached its lowest level since August, coincided with the closing of the yen arbitrage trading, which caused Bitcoin to bottom around about $49,000 in August. The crypto asset sentiment index shows a large number of signals of buying against the trend. The general pessimism in liquidity, on-chain data and derivatives markets shows that downside risks are relatively limited. At these price levels, the risk-reward outlook looks quite favorable.