Santiment warns: the explosion of social media discussion about the possibility of the Fed lowering interest rates in September could signal a local market peak for cryptocurrencies.
The market surged following Fed Chair Jerome Powell's dovish speech at Jackson Hole, while the CME FedWatch Tool shows a 75% expectation of a rate cut. However, sentiment data indicates caution as euphoria rises.
MAIN CONTENT
Discussions around the Fed, interest rates, and Powell have peaked at 11 months, which Santiment considers a signal that may indicate a local peak.
The CME FedWatch Tool records a 75% probability that the market expects a rate cut in September.
Divided analytical perspectives: some forecast altcoins to increase by 10-50 times, while others warn of short-term pressure and risks if the Fed does not cut in 2025.
How is the Fed's September interest rate decision affecting the cryptocurrency market?
Market sentiment turned greedy after Jackson Hole as expectations for rate cuts heightened, but Santiment's sentiment data shows the risk of excessive enthusiasm.
Powell mentioned that inflation and labor conditions may need policy adjustments, pulling expectations for cuts sharply higher. According to the CME FedWatch Tool, 75% of investors project the Fed to lower interest rates in the September meeting. History shows that shocks to expectations often amplify short-term volatility, especially when risky assets have already risen ahead of the news.
Notably, pre-event rallies often lead to accumulated leveraged positions; if information comes out lower than expected, profit-taking and liquidation risks may arise. This aligns with Santiment's warnings about local emotional peaks.
Why does Santiment recommend caution before the Fed's September meeting?
As mentions of keywords Fed, rate, cut, Powell on social media have surged to an 11-month high, a historical pattern often associated with euphoria and local peaks.
In the report, Santiment states that a sudden spike in discussions around a single bullish narrative often coincides with overly optimistic market periods. When all attention is focused on a single argument, the margin of safety decreases as consensus expectations can be easily 'corrected' when actual data does not match.
"Historically, a significant spike in discussion around a single bullish narrative may indicate that enthusiasm is excessively high and signal a local peak."
– Santiment, This Week in Crypto report, 2025, source: Santiment
Why is the analytical perspective divided regarding the impact of rate cuts?
Due to the timing differences in reflecting policy into prices and the risk of recession, some expect an immediate bullish push, while others forecast delayed impacts and short-term pressures.
One side considers reduced capital costs a catalyst for inflows into risky assets, especially altcoins. The other notes that the risk of a slowing economy may overshadow the benefits of low interest rates in the short term, creating conflicting volatility before a long-term trend forms.
What do optimistic arguments say about the next cycle of cryptocurrencies?
Trader Ash Crypto expects the Fed to pivot strongly towards easing, with large inflows and altcoins entering a parabolic phase.
After Powell's speech, Ash Crypto forecasts that the Fed will begin easing in Q4 with two rate cuts, leading to a massive influx of capital into cryptocurrencies and altcoins potentially increasing by 10-50 times. This expectation is based on precedents of increasing liquidity cycles. However, extreme gains often come with the risk of high volatility and depend on the actual pace of easing.
"We are about to enter a parabolic phase, where altcoins will surge 10 to 50 times."
– Ash Crypto, cryptocurrency trader, 2025, source: X (Ashcryptoreal)
What are the cautious warnings focusing on?
Markus Thielen believes that the expectation for a bullish push is premature and Bitcoin may face short-term pressure due to recession fears.
According to Thielen (10x Research), long-term price opportunities may arise, but short-term remains vulnerable as weak economic indicators create resistance on risky assets. Additionally, network economist Timothy Peterson warns that if the Fed does not cut rates in 2025, the cryptocurrency market could face a broader decline. This reflects the risk of 'policy disappointment' when expectations have outpaced reality.
Which interest rate scenarios are noteworthy and what potential consequences could there be for cryptocurrencies?
There are three main scenarios: a cut in September, delaying cuts until the end of the year, or maintaining for longer than expected; each scenario leads to different market positioning.
September cut: improved sentiment, but susceptible to 'sell the news' if prices have already reflected it. Delaying cuts until the end of the year: choppy volatility, shifting cash flows to short-term defensive assets. Maintaining for longer: broad adjustment risks if expectations are broken; cash flows may decrease in high-risk asset classes like altcoins.
Scenario Short-term Impact Mid-term Impact Main Risks September Cut Increased sentiment, potential profit-taking after news Low-cost capital support Overly high expectations, accumulated leverage Delay until the end of the year Increased volatility, strong divergence Gradually stabilizing as the path becomes clear Poor macro data cancels out effects Maintain for longer Selling pressure on risky assets Cautious, selective cash flow Policy disappointment, declining liquidity
What signs should investors monitor ahead of the September meeting?
It is advisable to monitor the CME FedWatch probability, Fed officials' speeches, CPI data, labor market conditions, and social media discussion trends tracked by Santiment.
In addition, monitoring fluctuations in the funding rate, leverage ratios, inflows into trading funds, and on-chain behavior helps assess liquidation risk. When discussing a single bullish narrative that spikes, risk management and scenario planning for entry/exit points become particularly important.
What data and references have been cited?
The article uses data from Santiment regarding social media discussion trends, the CME FedWatch Tool for policy probabilities, and public statements/comments from Ash Crypto, Markus Thielen, and Timothy Peterson.
Source: Santiment (This Week in Crypto, 2025), CME FedWatch Tool, X (Ashcryptoreal), 10x Research, public statements from experts mentioned in the content.
Frequently Asked Questions
What does a 75% expectation of a cut from the CME FedWatch Tool mean?
This is the implied probability from interest rate derivatives markets indicating that the majority expect the Fed to cut rates in September. This is not a commitment from the Fed, but merely reflects market pricing at the time of observation. Source: CME Group.
What impact does the explosion of social media discussion have on prices?
According to Santiment, spikes around a bullish narrative often coincide with periods of euphoria, potentially signaling local peaks and short-term adjustment risks. This is a sentiment indicator that needs to be combined with other data for confirmation.
Will a rate cut immediately drive Bitcoin prices up?
Not necessarily. The impact is delayed and depends on whether expectations have been reflected in prices. Some analysts warn of short-term pressures if economic weakness overshadows the benefits of low interest rates.
What if the Fed does not cut rates in 2025?
Some experts like Timothy Peterson warn of a broader decline in the cryptocurrency market due to broken expectations and weakened inflows into risky assets.
What indicators or events should I monitor next?
Monitor CME FedWatch, CPI data, unemployment, Fed speeches, leverage indicators, and discussion trends from Santiment. Risk management before and after the September meeting is crucial.
Source: https://tintucbitcoin.com/santiment-fed-tang-lai-nguy-cho-crypto/
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