Bitcoin has a 40% downside risk despite subdued sentiment.
Crypto market sentiment has plummeted, with Matrixport's Greed and Fear Index falling to extremely depressed levels, suggesting the market is approaching another inflection point.
Even so, Matrixport suggests that Bitcoin may still see a future.
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Possible emotional signals for Bitcoin
In a recent market correction, Matrixport's overall sentiment dropped to record lows, reflecting widespread pessimism in the digital asset space.
The company's proprietary bitcoin fear and greed gauge highlighted the emergence of “sustainable bottoms” when the 21-day moving average drops below zero and then starts to turn higher. Based on the chart, the setup appears to be in place.
“This shift indicates that selling pressure is easing and market conditions are beginning to stabilize,” he wrote.
The report added that given the cyclical relationship between sentiment and Bitcoin's price action, the latest extreme reading could signal that the market is approaching another inflection point.
At the same time, Matrixport warned that prices may continue to decline in the near future.
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“While caution is warranted, the current environment is forcing us to sharpen our focus and prepare for meaningful restructuring ahead,” the company said.
Indicators on the chain signal bear market tension
Meanwhile, technical indicators reinforce the picture of a tense Bitcoin market. According to analyst Woominyu, the adjusted cost-to-profit ratio (aSOPR) has fallen back to the 0.92-0.94 range, a zone that coincides with earlier periods of bear-market stress.
In the year Similar readings occurred during the deep correction phases in 2019 and 2023, when coins were used for losses. Each time, this zone represents capital pressure and structural reset.
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Historically, multi-cycle lows have formed around the 0.92 to 0.93 range. The current structure, Woomincu said, looks more like reversals to bear market levels than typical mid-cycle reversals.
If the indicator fails to recover above 1.0 in the near term, it will increase the likelihood that Bitcoin will enter an extended bearish phase rather than a simple correction.
True market bottoms, the analyst argued, occur only after a deep dip in aSOPR, significant losses, and full selling pressure has exhausted. Although the market is entering a stress zone, it may not yet reflect its full potential.
“ASOPR is showing structural deterioration. This looks less like a dip and more like a regime shift. The real bottom may still need to squeeze deeper before a sustained reversal occurs,” the analyst added.
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This view is in line with widespread bearish speculation suggesting that Bitcoin may revisit the sub-$40,000 level before forming a sustainable bottom.
Bitcoin is currently trading around $68,000, according to data from BeinCrypto Markets. A drop below $40,000 would represent a decline of more than 40% from current levels, indicating the level of risk some analysts believe is on the table.
For now, sentiment indicators suggest a tipping point, but data on the chain suggests that structural weakness still needs to run its course before recovery begins.
