Crypto market sentiment has deteriorated sharply, with Matrixport’s Greed & Fear index falling to extremely depressed levels, suggesting the market may be approaching another inflection point.
Even so, Matrixport suggested that Bitcoin may still see downside ahead.
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Sentiment Signals Possible Inflection Point For Bitcoin
In a recent market update, Matrixport said overall sentiment has dropped to extreme lows, reflecting broad-based pessimism across the digital asset space.
The firm highlighted its proprietary Bitcoin fear and greed gauge, explaining that “durable bottoms” have typically emerged when the 21-day moving average dips below zero and subsequently begins to turn upward. The setup appears to be in place, according to the chart.
“This transition signals that selling pressure is becoming exhausted and that market conditions are beginning to stabilize,” the post read.
The report added that, given the cyclical relationship between sentiment and Bitcoin price action, the latest extreme reading may indicate that the market is nearing another potential turning point.
At the same time, Matrixport warned that prices may continue to decline in the near term.
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“While caution remains warranted, the current environment is increasingly forcing us to sharpen our focus and prepare for the conditions that typically precede a meaningful rebound,” the firm said.
On-Chain Indicators Signal Bear Market Stress
Meanwhile, technical indicators strengthen the picture of a stressed Bitcoin market. An analyst, Woominkyu, noted that the adjusted Spent Output Profit Ratio (aSOPR) has fallen back into the 0.92-0.94 range, a zone that previously coincided with major bear-market stress periods.
“In 2019 and 2023, similar readings occurred during deep corrective phases where coins were being spent at a loss. Each time, this zone represented capitulation pressure and structural reset,” the post read.
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Historically, multiple cycle lows formed around the 0.92 to 0.93 region. The current structure, Woominkyu noted, resembles prior transitions into bear market phases rather than routine mid-cycle pullbacks.
If the metric fails to recover above 1.0 in the near term, it could increase the probability that Bitcoin is entering a broader bearish phase rather than undergoing a simple correction.
True market bottoms, the analyst argued, tend to form only after deeper compression in aSOPR, peak loss realization, and full exhaustion of selling pressure. While the market appears to be entering a stress zone, it may not yet reflect full capitulation.
“aSOPR is signaling structural deterioration. This looks less like a dip and more like a regime shift. The real bottom may still require deeper compression before a durable reversal forms,” the analyst added.
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This view aligns with broader bearish projections suggesting Bitcoin could revisit levels below $40,000 before forming a durable bottom.
BeInCrypto Markets data shows Bitcoin is currently trading around $68,000. A drop below $40,000 would imply a decline of more than 40% from current levels, highlighting the scale of downside risk some analysts believe remains on the table.
For now, sentiment indicators hint at a potential turning point, but on-chain data suggests structural weakness may still need to run its course before a recovery can begin.