BTC is in a rarely seen panic zone for a decade, the rebound window is open but mid-term risks remain.

Recently, the Bitcoin sentiment indicator has fallen to an extremely rare level of panic not seen in the past decade. It sounds like a bottom signal, but Matrixport's on-chain data reveals another story — the structural reasons for this decline have not really been resolved.

There is a short-term rebound opportunity, but the mid-term pressure remains heavy

From a technical perspective, the on-chain Greed and Fear Index has retreated to the bottom of the measurement range, with the 20-day moving average approaching the historical low of the 10th percentile. Historical experience tells us that such extreme readings are usually accompanied by a rebound window lasting from several days to several weeks. The problem is that the triggering factors for this round of decline are still present: the key indicators that issued warnings in October have not truly reversed, and some signals have even shown price divergence. In other words, the structural problems in the market remain unresolved; it is just that the sentiment has reached the bottom.

Institutional passive selling + Fed hawkishness = Mid-term lethality

Data shows that since the FOMC meeting, Bitcoin and Ethereum spot ETFs have seen outflows of approximately $4.1 billion and $2.1 billion, respectively. These institutions have built up significant positions this year, and now most of them are trapped. In an environment of policy uncertainty, they are adopting a “mechanical” approach to reduce positions for self-rescue - it’s like an automatic vending machine continuously dumping chips into the market.

The macro situation is getting worse. The latest minutes from the Federal Reserve clearly indicate a shift to a hawkish stance, with the expectation of a rate cut in December falling straight from 90% to 30%. Officials generally believe there is no need to rush into easing, and they are also concerned that an AI-driven market could overheat. The labor market is also quite resilient, so there are no real reasons to expect policy loosening in the short term. Even if there is marginal improvement in the future, it will likely have to wait until early 2026.

Current logical chain

1. Short-term: There is a rebound internal momentum in sentiment and technical aspects.
2. Mid-term: Continued outflow of ETFs + Federal Reserve maintains hawkish stance + Institutions continue to reduce positions = Structural pressure not released
3. The real upward momentum: we have to wait for the macro environment to warm up, which may take until early 2026.

Short-term trading can seize opportunities during rebound windows, but for a trend-based increase, we still need to wait for more substantial positive catalysts. Right now, it's just a sentiment bottom, not a trend bottom.