Original author: 1912212.eth, Foresight News
Market sentiment has plummeted to freezing point.
In the early hours of February 27, Bitcoin failed to hold the $87,000 mark and continued to decline, even dipping to around $82,000 around 4 AM, marking a new low since November 2024. Meanwhile, its fear index has dropped to 20, the lowest since 2022, with the market still in a state of extreme fear.
Ethereum has not stabilized above $2,800 and has been on a downward trend, recently rebounding to $2,500 before facing another setback, dropping to around $2,200. SOL has fallen to around $130 due to the sluggishness of memes and the negative impact of a massive unlock on March 1, reaching a new low since September 2024.
Altcoins have shown mixed performance. According to contract data from Coinglass, $765 million in open contracts were liquidated across the network in 24 hours, with $608 million in long positions liquidated, and the largest single liquidation valued at $8.2054 million.
The deterioration of market sentiment has led to instability; where is the problem?
Bitcoin Spot ETF Data Shows Continuous Net Outflows
Bitcoin spot ETF data is an important indicator for observing market funds. If January saw a balance of inflows and outflows, February has seen a complete reversal. By the end of February, there were multiple instances of large net outflows. On February 25, the single-day net outflow reached $1.14 billion, with funds flowing out for six consecutive days from February 18 to February 25, and four consecutive days of net outflows from February 10 to February 13, with three of those days seeing net outflows exceeding $150 million.
As for Ethereum's spot ETF, recent performance has also been difficult to be optimistic about. Data shows that there were four consecutive days of net outflows from February 20 to 25, and while there was a single-day net inflow of $300 million on February 4, it had minimal support for the coin price.
Spot ETF data clearly indicates that current market participants are pessimistic about future coin prices.
Interest Rate Cuts Are a Distant Prospect
U.S. macro data and Federal Reserve policies still have a significant impact on the crypto market. The market has now anticipated that the Federal Reserve will not cut interest rates in March; is there still room for rate cuts afterward?
Federal Reserve's Bostic stated that he expects two rate cuts this year, but in the context of "general" uncertainty, there could be more or fewer cuts. He anticipates that inflation will not suddenly spike, and his overall inflation expectation is a bumpy downward path. He believes inflation will move towards the 2% target, but it has not yet been reached. The Federal Reserve's goal is to achieve the 2.0% target without harming the labor market.
Bostic mentioned that businesses are optimistic about deregulation but are concerned about the impacts of changes in tariffs and immigration policies. Additionally, he noted signs of easing in the labor market. Bostic stated that the current benchmark interest rate is moderately restrictive and needs to remain so. He said that due to the upcoming policy shift, economic slowdown is a significant issue, but businesses expect robust growth in the economy by 2025.
On February 26, the overnight financing rate options market anticipated that the Federal Reserve would cut rates twice by June, with a potential cut of about 50 basis points.
Future Market Trends
Matrixport released a chart stating that
Wall Street has become an important player in Bitcoin, and Bitcoin's 60% market dominance remains a key benchmark in the crypto market, with institutional trading behavior increasingly influencing its price movements. Concerns over the potential six-month delay of Trump's proposed tariffs and Bitcoin strategic reserve plan may be one of the reasons for the technical top formation seen in the current chart. From a technical analysis perspective, Bitcoin may retrace to the recent support level of $73,000.
CryptoQuant CEO Ki Young Ju stated, "If you are panic selling now, you might be a novice. A 30% pullback is quite common in a Bitcoin bull market: in 2021, Bitcoin fell by 53% but still recovered and set a new all-time high."
Bitwise Europe's research director Andre Dragosch pointed out that the crypto asset sentiment index has reached its lowest level since August, coinciding with the unwinding of yen carry trades, which caused Bitcoin to bottom out around $49,000 in August. The crypto asset sentiment index shows significant signals for contrarian buying. The overall pessimism in liquidity, on-chain data, and derivatives markets indicates that downside risks are relatively limited. At these price levels, the risk-reward outlook appears quite favorable.
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