The highly anticipated surge in social media chattering over the US Federal Reserve’s September interest rate decision could be a crypto warning sign, according to sentiment platform Santiment.
That comes after the crypto market recovered on Friday, and market sentiment returned to greed following Dove’s remarks at the annual Jackson Hole Economic Symposium. He hinted that the first cut of 2025 could come in September.
“Historically, such a massive spike in discussions about a single bullish narrative has shown that there is a possibility that a sense of happiness can be too high and inform local tops,” Santimento said in a report on Saturday. The company mentioned keywords that social media has been linked to the Fed, saying interest rate cuts have jumped to the highest level in 11 months.
Santimento cautions as analysts split
“The optimism about interest rate reductions fuels the market, but social data suggests that caution is needed,” Santimento said.
Santiment detected an increase in mentions of the keywords Fed, Rate, Cut, and Powell. sauce: single
In a speech Friday, Powell said current inflation and labor market conditions could “adjust” the Fed’s monetary policy stance. According to the CME FedWatch tool, 75% of market participants are hoping to cut interest rates at their September meeting.
Many crypto analysts have built on crypto market forecasts regarding the Fed’s decision throughout the year. Some people consider the rate to be a potential bullish catalyst, while others split into results.
sauce: Coinbase Facilities
After Powell’s speech, Crypto Trader Ash Crypto said, “The Fed will start money printers in the fourth quarter of this year,” meaning two interest rate cuts.
“We are about to enter the parabolic stage where altcoins explode 10-50 times,” Ash Crypto said.
Analysts warn that crypto could face short-term pressure
Others suggest that the Crypto market may not immediately see the impact of Fed rate reductions.
On April 11, 10x research director Markus Thielen said “it’s too early to expect bullish impulses.” He said that while long-term price opportunities for Bitcoin (BTC) could emerge, it could face short-term pressures driven by the fear of a recession.
Meanwhile, some say if the Fed does not take action this year, it could lead to headwinds in the crypto market.
On March 9, network economist Timothy Peterson warned that if the Fed keeps interest rate cuts in 2025, it could cause a wider crypto market slump.
