Bitcoin Tests $109K Support as Risk-Off Sentiment Deepens || Oct 17, 2025
Regional bank fears and ETF outflows weigh on crypto, but extreme sentiment may hint at a turning point
🪙 Crypto Market Overview
Bitcoin and altcoins endured another difficult session Thursday as U.S. regional bank concerns rattled financial markets and prompted risk-off flows. Stocks pulled back from recent highs, with traders citing credit stress and regional bank weakness as catalysts — a narrative eerily reminiscent of the Silicon Valley Bank panic.
Interestingly, the last time such fears hit markets, Bitcoin rallied sharply as investors sought refuge from traditional banking instability. This time, however, the crypto market remains subdued, struggling to regain confidence after last Friday’s coordinated sell-off.
Meanwhile, gold and silver continue to outperform, drawing capital away from crypto as traders seek safety in tangible assets.
📉 Sentiment & Market Psychology
The Crypto Fear & Greed Index has fallen to a six-month low, reflecting the growing pessimism across the market. Yet historically, such deep fear readings have often preceded major price bottoms.
In other words, sentiment may be reaching exhaustion — a condition that frequently marks the end of corrective phases.
⚠️ Invalidation Watch
Bitcoin has officially triggered the Head & Shoulders pattern discussed earlier this week and now trades below the neckline region. To neutralize the bearish setup, bulls must:
Reclaim $109,700 to stabilize momentum.
Push decisively above $112,000, which would invite short covering and restore confidence.
Liquidation data shows a concentration of short liquidations near $112,100, offering a potential short-term upside target if buyers regain control.
Failure to reclaim these levels increases the probability of a deeper slide toward the $100,000 zone, where the 365-day moving averages (both SMA and EMA) converge with key psychological support.
💹 ETF Flows & Market Structure
The BlackRock IBIT ETF, along with other Bitcoin ETFs, suffered heavy outflows Thursday. The ETF’s chart now sits at a critical inflection point, with a clear “make-or-break” setup forming.
A halt in redemptions or renewed inflows could immediately improve sentiment, especially as perpetual futures participation remains low. Sustained weakness in ETFs, however, would reinforce the short-term bearish tone.
📊 On-Chain Positives
Despite the technical stress, several on-chain indicators suggest that a structural reset is underway:
Daily Active Addresses (DAA) just posted their largest uptick in months, typically a prelude to a relief rally.
The Percentage of Supply in Profit has fallen significantly, resetting overheated conditions from earlier this quarter.
Both signals are consistent with prior capitulation phases that preceded sustained rebounds.
🧠 Model Signals
Our trend model continues to rise toward its upper zone — often associated with growing bearish momentum. Historically, when this model enters the red zone, it marks major cycle bottoms, suggesting we may be close to one now.
Meanwhile, positioning data shows that retail traders remain overly bearish, a dynamic that often precedes reversals once forced selling subsides.
🎯 Strategy Outlook
Short-Term (Days): Pending. Waiting for our model to turn lower before reactivating buy setups. Key resistance: $109.7K–$112K.
Medium-Term (Weeks): Long bias maintained; structure improves above $116K. Profit zone $140K–$160K.
Long-Term (Months): Cycle projection toward $230K unchanged unless $72K fails.
🧭 Strategy Notes
Head & Shoulders breakdown adds short-term risk, but strong on-chain resets point to recovery potential.
ETF outflows remain the key near-term pressure point.
Daily Active Addresses spike supports the case for an incoming rebound.
Extreme sentiment often marks late-stage corrections — stay alert for reversal signs.
🔑 Key Takeaways
BTC holds near $109K after triggering bearish pattern
Regional bank fears drag global risk sentiment lower
ETF outflows pressure market but may be near exhaustion
On-chain metrics reset, showing signs of base formation
Model nearing red zone, historically linked to cycle bottoms
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