Bearish sentiment remains strong, Bitcoin and Ethereum show no signs of improvement.

After a relatively calm start to the week, digital assets came under pressure due to bearish sentiment, and Bitcoin and Ethereum, the two largest cryptocurrencies, started to fall again on Tuesday. As of the time of writing, Bitcoin dropped by over 1%, trading at $69.16 million, having earlier fallen by 2.4% to $68,666; Ethereum fell by over 4%, trading at $2018, having earlier dropped by over 5% to a low of $1997. Bitcoin just went through an especially disastrous week, wiping out all the gains it had made since the end of 2024 when Trump won the US presidential election. While the new government is generally seen as crypto-friendly, Bitcoin has experienced its longest monthly decline since 2018. It is worth noting that Ethereum has been declining more than Bitcoin since its sharp drop in October last year. BTC Markets analyst Rachel Lucas stated, "After Ethereum fell below the range of $2800 to $3000, overall it is still in a bearish structure." She added that the current selling pressure is due to macro-level risk aversion sentiment and broader cryptocurrency market sell-off. Bitcoin had been hovering around $70,000 last weekend and Monday. Last Friday, Bitcoin briefly dropped to nearly $60,000 before bouncing back. Despite the rebound from last week's lows, the market's risk appetite for the two main cryptocurrencies remains limited. The Bitcoin derivative market is still filled with bearish signals - the funding rate for Bitcoin perpetual contracts remains below zero, indicating that traders are still positioning for a downward price movement or are demanding compensation to hold long positions. Meanwhile, the open interest volume of Bitcoin perpetual contracts has not recovered from its decline since October last year, highlighting the lack of confidence behind the rebound. According to Coinglass data, the current open interest volume has decreased by about 51% from its peak in October. Even though Bitcoin has rebounded from around $60,000 to $70,000, there are still no signs of a recovery in open interest volume. Andy Martinez, CEO of the Crypto Insights Group, stated that since the sharp drop on October 10th last year, market liquidity and depth have significantly decreased, leading investors to reduce leverage and adopt more conservative trading strategies. Option markets also signal caution. Bitcoin's implied volatility has dropped significantly from around 83% on Thursday to about 60% currently, indicating a decrease in expectations for large short-term volatility. However, the positioning structure still leans towards defense. Griffin Aden, head of research and options trading at BloFin, pointed out that the skew of 25-delta call/put options is still significantly biased towards put options, reflecting strong investor demand for downside protection. Griffin Aden stated that the impact of leverage on prices has significantly diminished, which helps reduce volatility and stabilize prices, but also means that many investors choose to take profits or stop losses at lower levels, adopt a wait-and-see approach, or even exit temporarily. He believes that in a market environment dominated by bearish sentiment, consolidation is more likely than a rapid rebound. In addition, since the sharp drop in early October last year, exchange-traded funds (ETFs) for these two cryptocurrencies have seen outflows of billions of dollars. Investors have withdrawn $3.2 billion from Ethereum ETFs, with $462 million flowing out just this year. Meanwhile, Bitcoin ETFs have seen outflows of $7.9 billion, with $1.8 billion already flowing out this year. The recent deep correction in Bitcoin has already attracted some market participants' warnings. Carmelo Aleman, a trader and analyst at the crypto analytics company CryptoQuant, pessimistically stated that Bitcoin has entered a bear market. He warned that the current trading patterns in Bitcoin spot and futures markets are clearly bearish, indicating that the market is in a "surrender" phase, where most market participants will suffer losses. Michael Burry, who rose to fame for his bet against the US housing market before the 2008 financial crisis, issued a warning that Bitcoin's sharp decline could further evolve into a self-reinforcing "death spiral," causing lasting damage to companies that have hoarded the cryptocurrency over the past year. In a blog post last week, he stated that the essence of Bitcoin has been exposed as a purely speculative asset, failing to serve as a hedge against currency devaluation like precious metals. He warned that if Bitcoin continues to decline, it could quickly squeeze the balance sheets of major holders, forcing a massive sell-off in the entire crypto ecosystem and leading to widespread value destruction. Richard Far, Chief Market Strategist and Partner at Pivotus Partners, made an extremely pessimistic prediction for Bitcoin, setting a price target of zero for the cryptocurrency. Far stated, "Our price target for Bitcoin is zero. This is not to create sensationalism, but a result derived from mathematical reasoning." Although the crypto market remains imbued with pessimism, Bernstein analyst Gautam Chughani is not afraid of the so-called "crypto winter" narrative. He expects Bitcoin to reach a new all-time high, with a target of $150,000 by the end of the year. In a report, he said, "The current price movement of Bitcoin is just a crisis of confidence. There haven't been any major issues, nor will there be any exposed scandals. In the age of artificial intelligence, Bitcoin and cryptocurrencies are no longer as attention-grabbing. The bearish sentiment towards Bitcoin is the weakest in history."