This optimistic sentiment is being observed among analysts despite the worsening of the price of Bitcoin to below $65,000 and the massive decline in the supply of Tether (USDT).
These telltale signs are reflective of circumstances experienced at the bottom of Bitcoin last in 2022 and could indicate a recovery.
Although the market has been struggling in the present, past data and the main indicators are creating hope for the upcoming years.
USDT contraction signals exhaustion
The recent adjustment of the market cap of Tether in 60 days has dropped to the second decrease of a significant mark in the history of the crypto business of under $3 billion.
It first happened in 2022, when the price of Bitcoin was at its lowest point of approximately 16,000. On-chain analysts regard this contraction as a sign of exhaustion in the market and not of a continuous bearish market.
The steepest decline in the supply of the USDT in the market (1.5 billion in February 2026) is the first steep decline since November 2022.
At the beginning of January 2026, the supply of USDT reached its highest point of $187 billion and then dropped to less than 184 billion in the middle of the month.
Analysts are of the opinion that these massive contractions are usually observed at the edges of the market rather than in the long-run bearish markets.
Although the market cap of the total stablecoins shrank, it is approximately at an all-time highs which could indicate a transfer of funds in the wider crypto ecosystem instead of departures.
Fear & Greed Index Shows Extreme Fear
The Crypto Fear and Greed Index is also recording very high levels of pessimism, with the index recording as low as 5.
It is the same fear that was experienced during the FTX collapse in 2022 when Bitcoin fell to a price of $16,000.
According to analysts, extreme fear tends to indicate that the market cycle is in the bottom and there may be a buying opportunity.
Bitcoin has already recovered since it hit a low of $61,000 in February, and was trading between 65,000 and 68,000.
This is still considerably less than its all-time high of $126,000 in October 2025, but the low sentiment may portend an imminent recovery.
The daily losses of up to 1.24 billion are being recorded to decrease to 480 million gradually as panic selling is subsiding, according to the analysts.
This increase is an indication that the worst fears of the market might have been overcome.
Historical patterns indicate recovery
Historically, the most powerful market recoveries followed vast areas of fear. Such as in the case of the Covid-19 crash in March 2020 and the 2021 mid-cycle correction, there have been huge price spikes following extended outlooks of pessimism in Bitcoin.
These tendencies were repeated in the 2022 crypto winter that saw the collapse of FTX, triggering huge sell-offs.
Although the shrinkage of the USDT is worrying, analysts note that the same trend has happened in the market in the past, resulting in robust recoveries.
The fact that the USDT redemptions stabilize early in March and the fact that the Fear and Greed Index leaves the extreme fear zone will be the key.
When it comes to Bitcoin and the crypto market overall, many analysts believe that this will rebound despite the present market indications that the market should be cautious.
The past records show that when the market hits exhaustion levels, which is characterized by sudden decreases in the supply of USDT and high levels of fear, then good price recovery normally follows.
It is still unclear whether this trend would persist in the short term, but analysts are keenly keeping an eye on these indicators to show signs of improvement.
The post Why Analysts Remain Bullish Despite USDT and BTC Red Flags first appeared on Coinfea.