The crypto market went through a stressful and cleansing week, dominated by risk-off behavior, heavy deleveraging, and persistent capital outflows.
$BTC started the week around $78,000 and ended close to $70,000, but the headline numbers do not fully reflect the intensity of the move. During the week, the market experienced a sharp long squeeze, driving $BTC down to a low near $59,700. This move triggered a broad wave of forced position closures and accelerated capital flight.
Deleveraging Phase Continues
The violent decline led to a significant reduction in leverage across the market. A large amount of speculative positioning was flushed out, confirming that the market is still in a deleveraging and reset phase rather than a recovery phase.
This process was accompanied by notable outflows, both on-chain and via investment products, reinforcing the idea that participants are prioritizing capital preservation over risk-taking.
Sentiment: Extreme Fear Dominates
Market sentiment deteriorated sharply:
The Fear & Greed Index fell into extreme fear at 9
During the worst phase of the sell-off, it briefly reached 5, one of the lowest readings in recent periods
Although a small rebound followed, sentiment remains decisively risk-off, showing that confidence has not yet returned and that market participants remain cautious.
ETF Flows and Institutional Behavior
Bitcoin spot ETFs continued to register substantial net outflows throughout the week. There was no clear sign of institutional stabilization or re-accumulation, suggesting that larger investors are still reducing exposure rather than positioning for upside.
As long as these outflows persist, they act as a structural headwind for the broader crypto market.
Market Interpretation
Taken together:
Deep deleveraging
Extreme fear
Ongoing ETF outflows
Weak risk appetite
indicate that the market is still in a defensive and corrective phase. The recent rebound appears more as a pause in selling pressure than a shift in market regime.
This type of environment is typically associated with uncertainty and rebuilding, rather than strong directional conviction.
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