Fear index reversal! Bitcoin sentiment improves, institutional buying quietly returns

Since the start of 2026, the Bitcoin market has shown signs of a long-awaited recovery. As of January 22, Bitcoin price rebounded to around $89,870, a clear bounce from the late December low of $87,000. More importantly, multiple on-chain indicators are simultaneously signaling bullish momentum, especially the reversal of the Fear Index, further confirming that market sentiment is gradually improving.

Sentiment Turnaround: From Extreme Panic to Cautious Optimism

The most direct reflection of improved market sentiment is evident. The “Cryptocurrency Fear and Greed Index,” which measures market fear levels, has rebounded from last week’s low of 29 points to around 40, with some platforms even reaching 50. This shift indicates the market has officially exited the “extreme panic” capitulation zone, and the rise in the Fear Index corresponds to a gradual revival of investor confidence.

Although the Fear Index is still in the “fear” zone and has not yet reached full optimism, its rebound itself is a key signal—the market has passed its darkest hours. This emotional recovery often precedes price movements, laying a psychological foundation for subsequent rebounds.

Institutional Funds Reemerge, Coinbase Premium Stops Falling and Bounces Back

The movement of US institutional investors provides stronger support. The “Coinbase Premium Index,” which measures the buying strength difference between the US and global markets, is performing a V-shaped reversal. After plummeting to -150 at the end of December, it has now significantly rebounded and approached the zero line.

This suggests that after the year-end profit-taking pressure subsided, US institutional investors have re-entered the “buy side.” If the Coinbase Premium Index further turns positive and stabilizes, it will confirm that the “US dollar buying” has officially returned. Notably, the resurgence of institutional capital aligns with the reversal of the Fear Index, both signaling bullish prospects.

Robust Chip Structure, Bullish Advantage Remains

Derivatives market data further consolidates optimistic expectations. Although the Bitcoin “Long-Short Ratio” has recently declined due to deleveraging, it still remains above the critical 1.0 threshold. When the ratio exceeds 1.0, it indicates that long positions in futures markets still outnumber short positions, reflecting a healthy cooling of market structure rather than panic-driven collapse.

This stable chip structure suggests that the risk of large-scale cascading liquidations in the future is relatively manageable. The resilience of long positions and the rebound of the Fear Index complement each other, jointly forming short-term support.

Risks Remain, Cautious Strategies Are More Rational

Despite multiple indicators turning positive, market risks should not be overlooked. First, although the Fear Index has rebounded, it remains in the “fear” zone, reflecting lingering doubts among investors about the Federal Reserve’s policy direction. After the hawkish signals from the December FOMC meeting, the market has readjusted expectations for rate cuts.

Second, the recent rebound may partly result from the technical correction after year-end tax-loss selling pressure, rather than a full-scale return of confidence. Analysts emphasize that to confirm a complete trend reversal, the Coinbase Premium Index must decisively turn positive and stabilize, and the Fear Index must continue upward, indicating that institutional funds have fully entered.

2026 Year-End Strategy: Accumulation Over Chasing Highs

Overall, the return of institutional buying, improvement in the Fear Index, and stable chip structure lay a solid foundation for a bullish Bitcoin trend. However, since fear has not fully dissipated and macro headwinds persist, the current strategy leans more toward “cautious accumulation” rather than “blindly chasing highs.”

The market’s recovery is still in its early stages; the reversal of the Fear Index is just the beginning. Investors should closely monitor subsequent developments in indicators like Coinbase Premium and the Long-Short Ratio. Given recent market volatility, a rational assessment of risks and phased entry might be a more prudent approach.