Bitcoin is at a critical technical inflection point as sentiment collapses to one of its lowest readings in years. The Crypto Fear & Greed Index has dropped to 5. It is a deep in Extreme Fear territory, a level historically associated with liquidity stress.
Bitcoin is also testing its 200-week moving average. This is a long-term trend benchmark closely tracked by institutional and technical traders.
The recent market decline caused Bitcoin to drop from $67,000 to $60,200 and it resulted in positions being liquidated.
The market experienced increased downward pressure as traders closed their positions since liquidity thinned across derivatives markets.
The market also saw a massive flush of leveraged long positions. This scenario created a speculative position reset according to open interest decline and simultaneous liquidation.
When sentiment reaches single-digit levels on the Fear & Greed Index which aggregates volatility, volume and momentum metrics on a 0-100 scale. It reflects major risk aversion among participants.
The largest cryptocurrency saw nearly $3.8 billion withdrawn over the last five weeks. Last week alone experienced outflows of $315.86 million. It suggests institutions continued to reduce their investment positions.
USDT supply experienced a decline of almost $3 billion in the last 60 days and it represents the sharpest decrease since late 2022. This suggests capital is leaving the crypto ecosystem.
The CryptoQuant exchange whale ratio has increased to 0.64. The numbers show that large holders currently account for most exchange inflows. Market analysts use this ratio to identify distribution patterns instead of accumulation trends.
Bitcoin price closed below the lower consolidation boundary at $65,729 on Monday and declined slightly. It hit a low at $62,500 the next day.
If BTC fails to close above the $65,729 breakdown level, it could extend the decline toward the key support level at $60,000.
The immediate focus is still the $60,000-$62,600 support. This sits just above the 200-week moving average near $58,900.
The Relative Strength Index (RSI) reads 36 and rebounds from the oversold territory. It shows fading bearish momentum.
The Moving Average Convergence Divergence (MACD) has a bullish crossover that is still intact and suggests a positive outlook.
If BTC closes above $65,729, it could extend toward $71,746.
Also Read: Is the Current Bitcoin Crash a Good Buying Opportunity in 2026?
The upcoming US employment and inflation data which will be released before the March Federal Reserve meeting will determine future rate expectations. Its impact on market sentiment will also play a key role.
The stabilization of ETF flows will function as a preliminary signal of institutional re-engagement.
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