Technical Signal Indicates Bitcoin Market Entering Extreme Bearish Phase

Based on an in-depth analysis by Axel Adler Jr. reported by BlockBeats, Bitcoin’s movement exhibits increasingly deep bearish market characteristics. Various technical indicators have signaled tightening liquidity conditions and worsening market sentiment. With BTC currently priced at $68.88K, key index readings indicate serious warnings about sustained market pressure.

Futures Funding Flow Indicates a Significant Sentiment Shift

The Bitcoin Futures Funding Flow Index, which combines price movement dynamics with capital flows in the derivatives market, has shown extreme degradation in recent days. Since last Friday, the index readings have dropped sharply from the 50 zone to a critical level of 7.1%—a figure typically indicating the lower extreme boundary of this indicator scale.

The continuous decline since January 28 confirms persistent selling pressure, with a crucial point occurring on January 30 when the index fell below the 45% threshold, formally entering the bearish market territory according to the model’s definition. Historically, a reading of 7.1% is rarely seen and often signals that the market has entered a capitulation zone—where panic selling reaches maximum intensity.

Local Stress Index Indicates Multi-Factor Pressure Accumulation

A more comprehensive stress indicator, the Bitcoin Local Stress Index (LSI), combines three fundamental elements: price volatility, funding rates in the futures market, and trader leverage positions. The combination of these three factors creates a sensitive market stress barometer. On the night of January 31, when the price briefly corrected below $78,000, the LSI spiked dramatically to 92.5—its highest level, indicating all technical pressures are concentrated simultaneously.

Throughout the weekend into early February, the index remained in a “tail risk warning” state, indicating that the three stress components (downtrend, increased volatility, and negative bias in funding flows) are being activated simultaneously. The current reading remains at 73, still in a high-risk zone. Historical notes show that when the LSI exceeds 90, it often coincides with the formation of a local price bottom, but if the index drops below 80 under pressure, it signals an escalation of sharp declines.

Combined Signals Indicate a Critical Market Phase

Holistically viewed, these two indices indicate an extreme weak funding flow combined with high market stress—characteristics of a “market capitulation” texture. This phase typically appears when pressure reaches its limit and begins to show signs of excessive liquidity absorption.

For a transition to healthier market conditions, the funding flow index needs to sustainably rise above 45%, and BTC prices must demonstrate stability. Until then, any price recoveries should be viewed as technical corrections within a larger bear structure. With current market sentiment at 50% bearish, this combination of signals suggests traders should remain cautious of ongoing volatility and potential declines before the index readings show a fundamental reversal.