Structuring Opportunities in Extreme Panic: In-Depth Analysis and Trading Strategies for the Cryptocurrency Market on the Evening of February 21, 2026

The current cryptocurrency market is shrouded in "extreme panic" sentiment, with the Fear and Greed Index at only 8 points, reaching a historic low. Bitcoin is oscillating between $67,000 and $68,000, significantly below its all-time high. However, extreme market sentiment often breeds contrarian investment opportunities. Coupled with the Federal Reserve's liquidity policy shift, ongoing institutional accumulation, and key technical support levels, we believe this is a strategic window for medium- to long-term positioning.

I. Market Overview

1.1 Core Asset Price Performance

As of the evening of February 21, Bitcoin (BTC) is quoted at approximately $67,800, with intraday fluctuations between $67,500 and $68,100, down about 0.3% over 24 hours. Ethereum (ETH) is also under pressure, with major cryptocurrencies generally oscillating at recent lows. Looking at a longer cycle, Bitcoin has declined about 3.43% over the past 30 days, with little change over the past 7 days, indicating that downward momentum is waning.

1.2 Market Sentiment Indicators

The Fear and Greed Index is currently at 8 points (up from 7 yesterday), still in the "extreme fear" zone. This suggests market participants' sentiment is near the bottom, with investors generally in panic selling or cautious observation. Historical experience shows that when this index drops below 10, it often marks a medium- to long-term bottom, providing a rare opportunity window for contrarian investors.

II. Macro Environment and Policy Analysis

2.1 Federal Reserve Liquidity Policy Shift

According to the previously shared Federal Reserve rate adjustment mechanism for 2025, the December FOMC meeting eliminated the standing repurchase agreement (SRP) limit of $500 billion daily, allowing banks to borrow from the Fed against unlimited government bond collateral. This policy adjustment significantly increases market liquidity, creating a loose macro environment for risk assets. Although short-term market sentiment remains subdued, the underlying logic of ample liquidity remains unchanged, providing medium- to long-term support for the crypto market.

2.2 Continuous Institutional Capital Inflows

Over the past five weeks, net inflows into spot Bitcoin ETFs have reached $6.63 billion, with BlackRock’s crypto investment portfolio soaring from $54.77 billion at the start of the year to $102.09 billion. This sustained institutional accumulation indicates that, despite volatile prices, long-term capital continues to systematically allocate to crypto assets. Institutional behavior tends to be forward-looking, and ongoing inflows suggest that current price levels hold long-term allocation value.

2.3 Ethereum Foundation’s 2026 Roadmap

The Ethereum Foundation has released its development plan for 2026, along with expanded applications such as Dubai real estate tokenization. ETH’s usage in on-chain real-world assets is expected to increase. Although ETH performance is relatively weak at present, the ecosystem’s fundamentals continue to improve, laying a foundation for value reversion.

III. Technical Deep-Dive

3.1 Key Price Levels for Bitcoin

Bitcoin’s current core trading range is between $67,000 and $68,000. From your previous technical analysis, $91,000 is a key resistance level, and the current price has sharply retraced below this point by about 25%. This deep correction releases prior profit-taking pressure and creates conditions for new capital entry.

Key support levels: $65,000 is an important short-term support. If broken, the price could test the $60,000–$62,000 zone. From a miner cost perspective, around $80,000 is the breakeven point for normal operation; current prices are significantly below this, indicating the market has priced in extreme pessimism.

Key resistance levels: $70,000 is a short-term psychological barrier. Breaking through could lead to testing the $72,000–$75,000 range.

3.2 Market Structure Evolution

As previously pointed out, the move from $61,000 in August 2024 to the early 2025–2026 trend constitutes a macro bull cycle. The market is seeking a new equilibrium price. The current oscillation is not mere volatility but an evolution of the market’s deep structure—shifting from retail dominance to institutional dominance, from speculation-driven to value-driven. This structural transformation inevitably involves significant volatility and extreme sentiment.

IV. Risk Warning

4.1 Altcoin Selling Pressure Hits Five-Year High

A major risk currently is that altcoin selling pressure has reached a five-year high. This means that, aside from core assets like BTC and ETH, many small- and mid-cap tokens face liquidity shortages and ongoing selling pressure. Investors should be cautious of overvalued altcoins in their holdings to avoid irreversible losses during liquidity crises.

4.2 Geopolitical Uncertainty

Tensions in the Middle East persist, with rising risks of US-Iran conflicts, leading to higher crude oil prices and concerns over resurging inflation. This macro uncertainty suppresses risk assets, with strong performances in gold and oil diverting funds. Close attention should be paid to geopolitical developments and their potential impact on Fed monetary policy.

4.3 Frequent Security Incidents

Recent security breaches at crypto exchanges, including large-scale thefts, have shaken industry confidence. Investors should prioritize compliant, secure trading platforms and consider storing large assets in cold wallets.

V. Trading Strategy Recommendations

5.1 Asset Allocation Framework

Based on your previous "Golden Risk Control Anchor + Crypto Assets" strategy, the following allocation structure is recommended for the current environment:

Conservative Investors: 30–40% in gold as a risk control anchor, 40–50% in Bitcoin, 10–20% in Ethereum, and 10% in cash equivalents. This setup preserves upside potential of crypto assets while hedging extreme risks with gold.

Aggressive Investors: Can increase crypto holdings to 70–80%, but must set strict stop-loss levels and retain at least 20% in cash or stablecoins to cope with extreme market conditions.

5.2 Dollar-Cost Averaging Strategy

Given the current "extreme panic" state, a pyramid-style dollar-cost averaging approach is advised:

• First batch (current price range): Invest 30% of planned capital in the $67,000–$68,000 zone to establish a base position.

• Second batch (if price drops to $65,000): Add another 30% to lower average cost.

• Third batch (extreme scenario at $60,000): Invest remaining 40% to complete the position.

This strategy avoids heavy left-side risk and ensures sufficient ammunition for bottom-fishing during extreme conditions.

5.3 Derivatives Trading Tips

For derivatives traders, given high volatility:

• Strict leverage control: Keep leverage below 3x to prevent liquidation in extreme moves.

• Monitor funding rates: Data from CryptoQuant shows BTC funding rates have turned negative, indicating increasing bearish sentiment. Be wary of short traps.

• Set dynamic stop-losses: Use ATR-based trailing stops to protect profits.

5.4 Position Management Tips

• Avoid overvalued altcoins: Liquidity is flowing into core assets like BTC and ETH; avoid small-cap tokens.

• Watch ETF fund flows: Continuously track net inflows/outflows of spot Bitcoin ETFs as key institutional sentiment indicators.

• Regular rebalancing: Review asset allocations biweekly, rebalancing if deviations exceed 5 percentage points.

The current crypto market is in a "double kill" of sentiment and price, with the Fear and Greed Index at a historic low of 8 points. Yet, this is precisely a good opportunity for long-term investors. From macro liquidity, institutional flows, and technical support, the market is approaching a significant bottom zone.

As previously analyzed, the levels of $91,000 for Bitcoin and $3,000 for Ethereum reflect deep structural evolution. The current correction is not the end of a bull market but a buildup before a new rally. Investors are advised to adopt a phased accumulation strategy, controlling risks, and leveraging extreme sentiment to achieve long-term excess returns.

Remember: Be greedy when others are fearful, and be fearful when others are greedy. This market state is the perfect test of this investment truth.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Cryptocurrency markets are highly volatile; invest cautiously and make decisions based on your risk tolerance.