Crypto traders are staring down a Bitcoin sentiment plunge that’s hitting rock bottom in February, with Matrixport’s Greed & Fear index diving into extreme fear territory. This sharp deterioration signals broad pessimism across digital assets, potentially marking an inflection point where selling exhausts itself. Yet, even as bottoms form historically in such lows, the firm cautions of further downside ahead, urging sharpened focus amid the gloom.
Bitcoin sentiment doesn’t shift in isolation; it’s intertwined with on-chain stress and cyclical price patterns we’ve seen before. As the 21-day moving average of the index dips below zero and hints at an upturn, questions arise: is this capitulation or just the prelude to deeper pain? With BTC hovering around $68,000, analysts eye sub-$40,000 levels, echoing past bear phases. For those navigating this, check our analysis on institutions calling bear market crypto 2026 for broader context.
Sentiment Signals: Inflection Point or False Dawn?
The Bitcoin sentiment readout from Matrixport paints a picture of exhaustion, where extreme lows on their proprietary gauge often precede durable bottoms. Their chart shows the 21-day moving average crossing below zero, a setup mirroring past recoveries. This transition typically means selling pressure wanes, stabilizing conditions for a rebound. But in crypto’s twisted cycles, hope flickers amid the despair, only to get snuffed out by reality.
Matrixport’s update emphasizes the cyclical tie between sentiment and price: extreme readings flag turning points. Yet, they temper optimism, warning prices may decline further in the near term. This duality forces traders to prepare for rebounds while bracing for pain. It’s a reminder that sentiment isn’t a crystal ball but a rearview mirror on market psychology.
Broader market vibes align with this, as seen in recent whale moves and token unlocks pressuring sentiment. For instance, our coverage of token unlocks February 2026 first week highlights added selling risks.
Matrixport’s Greed & Fear Index Breakdown
Matrixport’s index hit depressed levels, with the 21-day average signaling potential stabilization. Historically, bottoms emerge when this metric turns upward from sub-zero, indicating exhausted sellers. The firm notes this setup is in place, per their chart, suggesting selling pressure fades. But caution reigns: near-term declines remain on the table.
“This transition signals that selling pressure is becoming exhausted and that market conditions are beginning to stabilize,” their post reads. Still, the environment demands vigilance, sharpening focus for rebound setups. In past cycles, such readings preceded meaningful upswings, but timing is everything in crypto’s chaos.
This Bitcoin sentiment extreme echoes 2019 and 2023 lows, where fear paved recovery paths. Traders watching this should cross-reference with Bitcoin hashrate drop indicators for mining stress context.
Cyclical Patterns in Bitcoin Sentiment
Cyclical analysis shows sentiment extremes correlate tightly with price action, often bottoming before reversals. Matrixport highlights how durable lows form post-exhaustion, with current readings nearing that zone. However, without quick recovery, downside persists. This isn’t hype; it’s pattern recognition from years of data.
The report stresses preparation amid caution, as rebounds follow such setups. Yet, near-term price drops loom, testing holder resolve. In February’s gloom, this Bitcoin sentiment shift could be the spark or sparkler fizzling out.
On-Chain Indicators: Bear Market Stress Mounting
On-chain metrics underscore the Bitcoin sentiment woes, with adjusted Spent Output Profit Ratio (aSOPR) retreating to 0.92-0.94. Analyst Woominkyu flags this as bear-market stress territory, akin to 2019 and 2023 capitulations. Coins traded at losses signal structural resets, not mere dips. The market’s entering a phase where routine pullbacks morph into regime shifts.
Historical lows clustered around 0.92-0.93, forming cycle bottoms after deeper compression. Current resemblance to bear transitions raises flags: failure to rebound above 1.0 boosts broader bearish odds. True bottoms demand peak loss realization and seller exhaustion, which hasn’t fully materialized. This data cuts through sentiment fog, revealing underlying weakness.
Aligning with projections of BTC sub-$40,000, these signals warn of 40%+ drops from $68,000. Pair this with Bitcoin miners shutdown risk for supply-side pressures.
aSOPR’s Historical Bear Signals
aSOPR dipping into 0.92-0.94 mirrors past deep corrections, where loss-taking marked capitulation. In 2019 and 2023, this zone preceded resets, with coins spent at losses. Woominkyu notes each instance represented structural shifts, not mid-cycle noise. The metric’s failure to recover signals ongoing deterioration.
“In 2019 and 2023, similar readings occurred during deep corrective phases where coins were being spent at a loss,” the analysis states. Multiple cycle lows formed here, but current structure leans bearish. Deeper aSOPR compression likely needed for reversal.
This Bitcoin sentiment backed stress ties into why is crypto market down today factors amplifying downside.
Path to True Market Bottoms
True bottoms require aSOPR extremes, max loss realization, and seller burnout. Current levels hint at stress but not full capitulation. Woominkyu argues this looks like regime shift, demanding deeper pain. Probability rises for bear phase if no quick 1.0 breach.
“aSOPR is signaling structural deterioration. This looks less like a dip and more like a regime shift,” he adds. BTC could revisit sub-$40,000, a 40% plunge underscoring risks. Sentiment may tease turns, but chains don’t lie.
Price Risks: Sub-$40K on the Horizon?
Bitcoin sentiment weakness pairs with price charts showing vulnerability, trading near $68,000 per BeInCrypto data. Analysts project sub-$40,000 bottoms, implying massive declines. This aligns with on-chain stress, where sentiment hints at turns but metrics demand more pain. February’s plunge tests narratives of resilience.
Broader bear projections factor in hashrate drops, unlocks, and macro woes. While inflection points loom, structural resets precede recoveries. Traders must weigh sentiment hope against hard data. In crypto, bottoms are processes, not events.
Market Context: Broader Bear Pressures
February’s Bitcoin sentiment slump fits a k-shaped recovery narrative, with institutions wary. Token unlocks and miner risks compound downside. Our take on US crypto ETFs inflows contrasts fleeting optimism.
Whale accumulation hesitates amid retail fear, per recent reports. This environment sharpens focus on resilient plays. Sentiment may stabilize, but chains signal more turbulence ahead.
What’s Next
For Bitcoin sentiment, watch aSOPR recovery and index upturns for rebound cues, but brace for sub-$40K tests. Extreme fear often births bottoms, yet history demands capitulation first. Traders should monitor on-chain exhaustion alongside macro like US jobs data Bitcoin risks.
Structural weakness persists, but setups favor prepared minds. This February bear stress could forge stronger cycles, or drag into prolonged pain. Depth over dip-buying frenzy defines winners here.
Institutional bear calls loom large; see our K-shaped crypto market 2026 for divergence insights.
