Crypto’s bottom may depend on sentiment, not fundamentals – Here’s why

Investors are debating whether the market has actually found a bottom.

One voice in that discussion is Brian Armstrong, who argues that the current crypto correction looks more psychological than structural. In his view, persistent fear and uncertainty are driving investor positioning.

From a sentiment perspective, that argument holds some weight. Since the October crash, the Fear and Greed Index has printed two consecutive lower lows, with the most recent reading dropping to an extreme level of 5. 

Source: CoinMarketCap

In this setup, any meaningful rebound in crypto would likely depend on when and how sentiment rotates back toward a risk-on tone, keeping the current price action fragile and vulnerable to continued chop.

Bitcoin [BTC], for example, has been consolidating around the $65k area for roughly two weeks.

A decisive breakdown from this range could open the path toward $60k or lower, unless investor psychology shifts back toward the neutral-to-greed zone.

Naturally, the question then becomes: What catalyst could realistically drive a shift in crypto market sentiment strong enough to stabilize price action and rebuild confidence?

At this stage, analysts appear to be anchoring their outlook around a single dominant factor.

Liquidity buildup signals the next crypto phase

Stablecoins are often the earliest signal of a shift in investor psychology.

In this context, analysts at CryptoQuant suggest that the U.S. midterm election could act as a psychological inflection point for the crypto market. 

Notably, it could accelerate the rollout of key regulatory frameworks and help restore confidence in digital assets.

Liquidity already appears to be moving ahead of broader risk sentiment. The total supply of ERC-20 stablecoins has rebounded since 2024 and now sits above $150 billion, pointing to early capital positioning.

Source: CryptoQuant

According to AMBCrypto, this backdrop supports Brian Armstrong’s view.

Structural softness continues to keep the debate around a confirmed market bottom unresolved.

Even so, investor positioning alongside resilient liquidity suggests underlying conviction may still be building, leaving the midterm election as a potential trigger for a sentiment reversal.

Until then, any strong rebound may be premature. 

From a technical standpoint, the crypto market is more likely to see deeper downside or continued choppy price action, reinforcing the idea that this cycle is being driven more by psychology than by structural strength.

Final Summary

• Persistent fear and weak sentiment suggest the current crypto correction is psychological, leaving price action fragile unless risk appetite returns.
• Rising stablecoin liquidity points to early capital positioning, with the U.S. midterm election seen as a potential trigger for a sentiment shift.