The uptick in social media discussions surrounding the eagerly awaited US Federal Reserve’s September interest rate decision could signal trouble for crypto, according to sentiment platform Santiment.
This follows a rally in the crypto market on Friday and a return to greed in market sentiment after Fed Chair Jerome Powell’s dovish comments at the Jackson Hole economic symposium, where he hinted that the first rate cut of 2025 could occur in September.
“Historically, a significant surge in conversation regarding a single bullish narrative can indicate that euphoria is reaching unsustainable levels and may signal a local top,” Santiment noted in a report on Saturday. The platform observed that social media mentions of terms related to the Fed and interest rate cuts have surged to their highest point in 11 months.
Santiment advises caution amid divided analyst opinions
“While enthusiasm about a rate cut is energizing the market, social data indicates that caution is recommended,” Santiment remarked.
During his speech on Friday, Powell stated that the current conditions regarding inflation and the labor market “could necessitate adjusting” the Fed’s monetary policy. As per the CME FedWatch Tool, 75% of market participants anticipate a rate cut at the September meeting.
Many crypto analysts have formulated their forecasts for the crypto market based on the Fed’s actions this year. While some view a rate cut as a likely bullish driver, opinions on the outcome remain split.
Post-Powell’s address, crypto trader Ash Crypto commented, “the Fed will kick off the money printers in Q4 of this year,” predicting two rate cuts that would lead to “trillions being funneled into the crypto market.”
“We are on the verge of entering a parabolic phase where Altcoins will surge 10x -50x,” Ash Crypto asserted.
Analyst cautions that crypto may experience short-term pressure
Conversely, some analysts believe the crypto market may not feel the effects of a Fed rate cut immediately.
On April 11, 10x Research head of research Markus Thielen stated, “Assuming a bullish trend is premature.” He suggested that while a long-term price opportunity for Bitcoin (BTC) might arise, it may face short-term challenges due to recession concerns.
Related: BTC climbed to 1.7% of global money before Fed chair indicated rate cut
In addition, there are concerns that if the Fed refrains from action this year, it could create obstacles for the crypto market.
On March 9, network economist Timothy Peterson warned that a lack of rate cuts from the Fed in 2025 could result in a broader downturn for the crypto market.
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