The panic index drops to 27, has the crypto market sentiment bottomed out?

Cryptocurrency Fear & Greed Index declines again. According to the latest news, on January 9th, the crypto fear and greed index dropped to 27, down from 28 yesterday. This marks the market’s consecutive days in “fear” mode, with an average of 28 last week. Notably, within just three days from January 6th to now, the fear index fell from 42 to 27, indicating a clear deterioration in market sentiment, while technical signals are hinting at different possibilities.

Rapid Deterioration of Fear Sentiment

Significant decline within three days

From related information, the speed of the fear index decline is noteworthy. On January 6th, the index was at 42; on January 7th, it remained at 42; on January 8th, it plummeted to 28; and on January 9th, it continued downward to 27. This rapid drop reflects a marked shift in market participants’ sentiment.

Analysis of Driving Factors

The fear index is composed of six dimensions, each with different weights: volatility (25%), trading volume (25%), social media buzz (15%), market surveys (15%), Bitcoin’s proportion in the overall market (10%), and Google search trend analysis (10%).

Currently, the index hovers at low levels, mainly reflecting several phenomena:

• Both volatility and trading volume are declining, possibly due to insufficient market participation
• BTC has fallen from a recent high of $94,000 to around $89,960, triggering technical fear signals
• Social media buzz is waning, indicating cooling market attention
• Market surveys show investor confidence is lacking

Contradiction Between Price and Sentiment

Technical signals remain positive

Interestingly, although sentiment is at a low, technical indicators are accumulating positive signals. According to related information, BTC’s Bollinger Bands have started to slightly expand after being at historically tight compression levels, which historically often precedes significant price moves. Short-term support is around $88,500, with resistance at $92,000.

This low sentiment combined with positive technical signals is often viewed by the market as a potential bottoming opportunity.

Institutional inflows remain steady

Another noteworthy detail is that despite market panic, ETF funds continue to see net inflows. In the first week of the new year, net inflows exceeded $120 million, led by BlackRock, reversing the record outflows seen at the end of 2025. This indicates that institutional investors still have willingness to position at low levels.

Key Points for Follow-up Observation

From the current market state, the fear index is already at a relatively low level, with 27 approaching the extreme fear zone (0-25). Historical experience suggests that when sentiment is extremely fearful, it often signals that market sentiment recovery may be imminent.

Focus should be on:

• Whether BTC can hold above the short-term support at $88,500
• Whether Bollinger Band expansion will trigger technical breakthroughs
• Whether social media buzz and market surveys will improve with price rebounds
• Whether institutional inflows will further accelerate

Summary

The fear index dropping to 27 reflects that current market sentiment is indeed at a low point, but this low may itself be setting the stage for subsequent recovery. The positive technical signals combined with ongoing institutional positioning suggest the market may be brewing a rebound. However, sentiment recovery depends on price action—once BTC can stabilize above key support and break resistance, the fear index may rebound accordingly. The key now is to patiently wait for technical confirmation signals.