"Buy the rumor and sell the news"
With the price of Bitcoin dropping below $108,000, Santiment noted a rise in short sales and whale accumulation
The widely anticipated 0.25% rate cut by the Federal Reserve on Wednesday triggered a wave of volatility in traditional and crypto markets. Powell's cautious remarks raised concerns in the crypto markets, briefly dropping the price of Bitcoin below $108,000, in a traditional scenario based on the principle of "buy the rumor, sell the news."
But historical patterns suggest recoveries occur after the masses capitulate.
Cryptocurrencies are becoming cautious.
Santiment reported in its latest update that Bitcoin's decline following Jerome Powell's hawkish tone reflects excessive optimism that had built up before the announcement. Traders had absorbed a cautious message and anticipated more monetary easing until the end of the year, but Powell's warning that another interest rate cut in December is "not guaranteed" flipped sentiment upside down.
The price of Bitcoin fell below 110,000 USD, as traders who had allocated their positions for expectations of interest rate cuts began to reduce their long positions. Blockchain data showed a significant increase in trading flows and a slowdown in funding rates, indicating that traders relying on leverage were surprised by the Federal Reserve's tone.
As social feelings have sharply flipped, discussions about "interest rate cuts" and "Powell" and "the Federal Reserve" have dominated cryptocurrency conversations. Historically, Santiment has noted that these spikes in public interest and fear often coincided with prices reaching short-term lows, indicating the possibility of a recovery once the panic subsides.
