Prominent market analyst aixbt has reported that Bitcoin ETF holders are now underwater for the first time, citing an average cost basis of $86,400. The market sentiment has deteriorated significantly, with the Fear and Greed Index dropping to a reading of 11. This sentiment reading is notably lower than the levels recorded during the FTX collapse when Bitcoin traded at $16k, indicating extreme bearishness among participants. The data highlights significant institutional pain, with BlackRock's holdings reportedly down by $1.09 billion this week alone. The breach of the ETF cost basis is a critical technical and psychological threshold. There is a growing concern that this specific price action could activate redemption mechanics within these ETF products, potentially creating further sell-side pressure in an already fragile market. This situation suggests a potential capitulation phase. The combination of record-low sentiment and institutional holders being underwater creates a precarious environment. Traders are now watching closely to see if the activation of redemptions leads to a feedback loop of selling, or if the extreme fear signals a contrarian bottoming opportunity.