Extreme Fear in the Crypto Market, but Experts See a Rally Coming

Analysts See a Market Low While Panic Reaches Peak

In the past thirty days, crypto markets have crashed, burning almost a trillion dollars in value and driving sentiment to the most negative levels since the pandemic.

However, as retail traders prepare for a long winter, several leading analysts argue that the current downturn has been widely misunderstood. According to them, we are not at the beginning of a bear market: this could be the last major shakeout before the next expansion phase.

Fear at All-Time Highs, but Market Structure Resembles Start of Bullish Trend

The overall data does not leave room for optimism. The total crypto market capitalisation is around $3.02 trillion, the Fear & Greed Index has plummeted to 15 ("Extreme Fear") and the Altcoin Season Index remains deeply entrenched in the "Bitcoin season", a sign that risk appetite has evaporated.

But according to analyst Sykodelic, the macro picture tells a different story. In his view, the current market structure is closely reminiscent of the beginning of 2019, a period characterised by fatigue, distrust and high volatility, before Bitcoin launched a year-long rally.

"We are about to scale the biggest wall of worry this sector has ever seen," he said, adding that weekly indicators such as DSS Bressert and RSI have returned to levels seen during the COVID collapse. Historically, these levels have coincided with areas of reversal.

Analysts Compare Crash to 2020 Liquidity Shock, Not a New Bearish Trend

Michaël van de Poppe, founder of MN Fund, also notes strong similarities to March 2020. At that time, many expected a double low, but it never happened. The market rebounded violently to the upside thanks to a wave of new liquidity.

"This collapse looks a lot like the COVID event," he explained. "Everyone expects a new plunge towards the lows, but that's exactly what didn't happen last time."

The current rebound seems to support his thesis. Bitcoin regained $89,000 on Monday and is up 8.5 per cent from Friday's lows. Analysts say that further strength in the next two weeks would drastically reduce the likelihood of a further decline.

Rotation Indicators Suggest Return of Capital to Altcoins

Another data point in the spotlight concerns the dominance of USDT.

According to Altcoin analyst Alf, every bearish crossing of the weekly stochastic on USDT.D over the past 28 months has anticipated a rally in the entire market. With the signal active again, he believes capital rotation is imminent.

"We just wiped out liquidity at the top," he said. "The next target is equal lows. I expect Bitcoin to aim for new all-time highs and for altcoins to finally outperform."

Not everyone shares total optimism, however; some commentators believe another shakeout may occur. However, the overriding message from analysts this week is clear: panic seems emotional, indicators look historical, and the market may be preparing for a new bullish impulse that few are really anticipating.