Santiment's sentiment platform warns that the social media buzz triggered by the Federal Reserve's September interest rate decision could become a warning signal for the crypto market.
After Fed Chair Powell made dovish remarks at the Jackson Hole Economic Symposium, the crypto market rebounded last Friday, with market sentiment returning to greed. Powell hinted that the first rate cut in 2025 may come in September.
"History shows that a significant amount of discussion about a favorable topic may indicate excessive exuberance, which could mean a local peak," Santiment mentioned in a report on Saturday. The volume of keyword mentions related to the Fed and interest rate cuts on social media reached an 11-month high.
Santiment advises caution, as analysts have differing opinions.
Santiment stated: "While optimistic expectations for rate cuts are driving the market, social data suggests caution should be maintained."
In his speech on Friday, Powell mentioned that inflation and labor market conditions may "require adjustments" to the Fed's monetary policy. According to the CME FedWatch tool, 75% of market participants expect a rate cut at the September meeting.
Many crypto analysts base their market predictions on the Fed's decisions throughout the year. Some believe that rate cuts could bring positive market sentiment, but there are still differing opinions on this outcome.
After Powell's speech, crypto trader Ash Crypto stated that the Federal Reserve will start the money printing machine in the fourth quarter of this year, which will be accompanied by two interest rate cuts, meaning "trillions will flow into the crypto market."
"We are about to enter the valley region, and altcoins will explode in growth by 10 to 50 times," Ash Crypto said.
Analyst warns that the crypto market may face short-term pressure
Others believe that the crypto market may not immediately feel the effects of the Fed's interest rate cuts.
On April 11, Markus Thielen, head of research at 10x Research, stated, "It is too early to expect a bullish impulse." He mentioned that while Bitcoin may present long-term price opportunities, it could face pressure from recession fears in the short term.
Related: Before the Fed Chair hinted at rate cuts, BTC's price accounted for 1.7% of global currency.
Meanwhile, some believe that if the Fed does not take action this year, it could have adverse effects on the crypto market.
On March 9, network economist Timothy Peterson warned that if the Fed delays rate cuts until 2025, it could lead to a more significant decline in the crypto market.
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