The cryptocurrency market recently underwent a rare emotional test, with Bitcoin's Fear and Greed Index plunging to a historic low in the single digits. While the market is engulfed in extreme fear, from a contrarian investment perspective, such intense sentiment lows often coincide with the formation of market bottoms. As Bitcoin's price climbed back above $71,000 on Monday, debate intensified over whether the $60,000 level marks the annual low. The divergence between this sentiment "freeze" and price action is setting the stage for a potential market reversal.

Observing technical indicators and liquidation data, multiple deep oversold signals have emerged. The daily Relative Strength Index (RSI) has reached an extremely low level around 15, a reading historically seen only near the end of the 2018 bear market and during the liquidity crisis of March 2020. Simultaneously, liquidation data reveals a significant market opportunity: over $5.45 billion in short liquidation positions are accumulated above the current price. A price rebound of approximately $10,000 could trigger massive forced liquidations. In contrast, a drop towards $60,000 would only involve about $2.4 billion in liquidations. This extreme imbalance between long and short forces suggests that, once upward momentum is activated, short covering could become a powerful fuel for driving prices higher.

However, overall market structure weakness still warrants caution. Data shows Bitcoin remains below its 50-day moving average around $87,000 and its 200-day moving average near $102,000. The price Z-score is recorded at -1.6, indicating the price is still below the statistical mean. Selling pressure persists in the derivatives market, with Sunday's net taker volume falling to negative $272 million. Furthermore, from a long-term Fibonacci retracement perspective, if historical patterns repeat, levels around $57,000 or even lower could still serve as potential support zones.

In summary, extreme sentiment indicators are pushing Bitcoin towards a critical inflection point. Although selling pressure dominates the derivatives market, the return of spot demand is key to triggering a genuine bull market response. In the short term, the $60,000 level will be tested as a core psychological support. Under the combined influence of extreme fear and significant short liquidation potential, Bitcoin is navigating a complex bottoming phase. Investors should monitor whether spot inflows can effectively counter selling pressure from the futures market to confirm the validity of a bottom signal.