Crypto Extreme Fear Suggests Incoming Inflection Point

Crypto fear drops below zero on Matrixport index, hinting selling pressure may be exhausted and a reversal could be near.

Bitcoin sentiment has dropped to its most pessimistic levels in years, with Matrixport’s proprietary Greed and Fear Index signaling that selling pressure may be nearing exhaustion.

The financial services firm suggested in its most recent analysis that the market could be approaching a turning point, even as prices face continued short-term uncertainty.

Sentiment Plummets to Multi-Year Lows

In a chart published on February 17, Matrixport revealed that its Greed and Fear Index has fallen below zero on its 21-day average, a zone that in past cycles appeared close to price floors.

The model tracks changes in positioning and volatility, and earlier instances of similar readings often occurred shortly before markets stabilized. The note added that prices could still drop further before any recovery, though historically such pessimistic sentiment often coincided with what it called “attractive” entry periods.

“Given the cyclical relationship between sentiment and Bitcoin price action, the latest reading suggests the market may be approaching another inflection point,” the company stated.

Matrixport also pointed out that traders needed to be careful, with the current environment demanding they “sharpen” their focus in preparation for “conditions that typically precede a meaningful rebound.”

And their call isn’t without merit if observable signals like institutional flows are anything to go by. According to Lookonchain, Bitcoin investment products recorded another week of outflows, with $380 million exiting in the last seven days. In that time, BlackRock’s IBIT hemorrhaged 3,538 BTC, closely followed by Fidelity, which saw over 2,000 BTC worth upwards of $143 million withdrawn.

Additionally, while BTC was trading around the $68,000 level at the time of writing, barely slipping in the last 24 hours, the king cryptocurrency is down nearly 3% on the week, with steeper drops on longer timeframes, including a 28% collapse over 30 days and a more than 40% decline across the past six months, per data from CoinGlass.

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Derivatives Contraction Signals

Matrixport’s analysts aren’t the only ones who’ve noticed the mood of trepidation in the market. Earlier in the month, Alternative.me’s widely followed Fear and Greed Index told a similar story, dropping to its lowest level since 2019, after Bitcoin shaved about $30,000 from its price in less than ten days.

Interestingly, data shared earlier today by analyst Darkfost pointed to another pressure point. According to them, open interest across exchanges has been shrinking steadily since the October 2025 market top, with positions on Binance down about 39% and declines of approximately 33% on Bybit and 24% on BitMEX.

“This environment indicates that investors are actively reducing exposure, cutting risk, or being forced out through liquidations driven by ongoing volatility,” Darkfost explained. “Under these conditions, it is difficult to envision Bitcoin stabilizing sustainably and reigniting a bullish trend in the short term.”