The surge in social media chatter across the extremely anticipated US Federal Reserve September rate of interest resolution might be a warning signal for crypto, says sentiment platform Santiment.
It comes after the crypto market rallied on Friday and market sentiment returned to greed following Fed Chair Jerome Powell’s dovish remarks on the annual Jackson Gap financial symposium. He hinted that the primary rate cut of 2025 could come in September.
“Traditionally, such a large spike in dialogue round a single bullish narrative can point out that euphoria is getting too excessive and will sign a neighborhood high,” Santiment said in a report on Saturday. The agency mentioned that social media mentions of key phrases tied to the Fed and rate of interest cuts have jumped to their highest stage in 11 months.
Santiment urges warning as analysts are divided
“Whereas optimism a few price reduce is fueling the market, social knowledge suggests warning is warranted,” Santiment mentioned.
Powell mentioned throughout his speech on Friday that present circumstances in inflation and the labor market “could warrant adjusting” the Fed’s monetary policy stance. According to the CME FedWatch Instrument, 75% of market contributors anticipate a price reduce on the September assembly.
Many crypto analysts have primarily based their crypto market forecasts on the Fed’s choices all through this 12 months. Whereas some see a price reduce as a possible bullish catalyst, others are divided on the end result.
After Powell’s speech, crypto dealer Ash Crypto said, “the Fed will begin the cash printers in This fall of this 12 months,” together with two price cuts, which suggests “trillions will movement into the crypto market.”
“We’re about to enter parabolic section the place Altcoins will explode 10x -50x,” Ash Crypto mentioned.
Analyst warns crypto could face short-term strain
Others counsel that the crypto market could not instantly see the influence of a Fed price reduce.
On April 11, 10x Analysis head of research Markus Thielen said, “Anticipating a bullish impulse is simply too early.” He mentioned that whereas a longer-term worth alternative for Bitcoin (BTC) might emerge, it could face short-term strain pushed by recession fears.
Associated: BTC climbed to 1.7% of global money before Fed chair signaled rate cut
In the meantime, some say that if the Fed takes no motion this 12 months, it might result in headwinds for the crypto market.
On March 9, community economist Timothy Peterson warned that if the Fed holds off on price cuts in 2025, it could trigger a broader crypto market downturn.
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