Social networks exploded with discussions about the upcoming Federal Reserve's interest rate decision — and this could be a warning bell for cryptocurrencies. According to sentiment analysis platform Santiment, mentions of key words related to the Fed and the expected rate cut reached an 11-month high.
It all started with Federal Reserve Chairman Jerome Powell's speech on August 22 at the annual economic symposium in Jackson Hole. His "dovish" statements fueled hopes for the first rate cut in September, which instantly reflected on cryptocurrencies — they showed a confident rise, and the mood of participants returned to greed.
Euphoria as a precursor to a fall
However, analysts at Santiment see this not as a reason for joy, but as a cause for caution. "Historically, such a mass surge in discussions around a single bullish narrative may indicate that euphoria is reaching critical heights and signaling a local maximum," the platform's report notes.
Social media data shows a sharp increase in mentions of words such as Fed, rate, cut, and Powell. This is a classic example of how excessive optimism can turn against the investors themselves.
Powell stated that current conditions in the inflation and labor market "may require an adjustment" to the Fed's monetary policy. According to the CME FedWatch tool, 75% of participants expect a rate cut at the September meeting.
Optimists vs. skeptics<
Many see a potential rate cut as a powerful catalyst for growth. Trader Ash Crypto expressed particular optimism: "The Fed will launch the money printing press in the fourth quarter of this year," meaning "trillions of dollars will flow into the cryptocurrency market." In his opinion, altcoins are ready to "explode" with growth of 10 to 50 times.
There is another side to the coin. Network economist Timothy Peterson warns: if the Fed takes no action this year, it could create a headwind for the entire cryptocurrency market.
