based on materials from the portal - By Cryptopolitan_News
According to Santiment, the increase in discussions on social media related to the long-awaited decision of the Federal Reserve (Fed) on interest rates may be a warning signal for cryptocurrencies. The platform published a report discussing the potential consequences for digital assets.
This report came amid a rally in the cryptocurrency market on Friday when investor sentiment shifted to greed after Federal Reserve Chairman Jerome Powell's speech at the annual economic symposium in Jackson Hole.
At the event, the Fed Chairman made remarks that may have hinted that the first rate cut in 2025 could happen as early as September. "Historically, such a sharp increase in discussions around one optimistic sentiment can indicate that euphoria is growing and signal a local maximum," Santiment stated.
According to Santiment, the number of mentions of keywords related to the Federal Reserve and interest rate cuts on social media reached a peak in the last 11 months. However, the company warned that the market should exercise caution. "While optimism about a rate cut fuels the market, social data indicates a need for caution," Santiment stated.
In his speech, Powell mentioned that the current situation with inflation and the labor market "may require an adjustment" to the Fed's stance on monetary policy.
Additionally, the CME FedWatch tool showed that about 75% of market participants expect a Fed rate cut at the September meeting. Many crypto analysts have based their market forecasts on the Fed's decisions since the beginning of the year.
However, analysts are currently divided in their opinions regarding the outcome of a potential rate cut: some believe it could serve as a potential catalyst for growth, while others do not share this view.
Meanwhile, others are not so sure about this idea, and most of them note that the cryptocurrency market may not immediately feel the impact of a Fed rate cut. In April, Markus Thielen, head of the analytics department at 10x, stated that it is too early to expect bullish momentum. He added that credit spreads may continue to widen, which means that "recessionary fears may penetrate deeper into the economy."
Thielen noted that while the long-term consequences of a recession may be positive for Bitcoin, the asset may face hurdles before gaining bullish momentum. "Typically, Bitcoin drops first when China devalues or the Fed cuts rates, as the first cut may not be significant and also confirms economic weakness," he said.
Some analysts also believe that if the Fed refrains from taking action this year, it could create difficulties for the cryptocurrency market.
In March, economist Timothy Peterson warned that if the Fed refuses to lower rates in 2025, the market could face a serious downturn. He then noted that this could potentially reduce the value of Bitcoin to below $100,000. "It takes some catalyst for that. I think such a catalyst could be anything, like the Fed's refusal to lower rates this year," Peterson said.
#Сryptomarketnews , #MarketTurbulence
We search for and publish the freshest and most relevant changes in global financial markets for you. Read with pleasure and analyze independently everything that can help you draw YOUR own conclusions before making financial decisions!!! 😉
Also, don't forget to share information with friends, acquaintances, and just those interested in changes in financial markets.
And there is ALWAYS a LOT of fresh news in this feed (!). There was, is, and will be!!!
