The surge in social media chatter around the highly anticipated US Federal Reserve September interest rate decision could be a warning sign for crypto, says sentiment platform Santiment.
It comes after the crypto market rallied on Friday and market sentiment returned to greed following Fed Chair Jerome Powell’s dovish remarks at the annual Jackson Hole economic symposium. He hinted that the first rate cut of 2025 could come in September.
“Historically, such a massive spike in discussion around a single bullish narrative can indicate that euphoria is getting too high and may signal a local top,” Santiment said in a report on Saturday. The firm said that social media mentions of keywords tied to the Fed and interest rate cuts have jumped to their highest level in 11 months.
Santiment urges caution as analysts are divided
“While optimism about a rate cut is fueling the market, social data suggests caution is warranted,” Santiment said.
Santiment has detected an increase in mentions of the keywords: Fed, rate, cut, and Powell. Source: Santiment
Powell said during his speech on Friday that current conditions in inflation and the labor market “may warrant adjusting” the Fed’s monetary policy stance. According to the CME FedWatch Tool, 75% of market participants expect a rate cut at the September meeting.
Many crypto analysts have based their crypto market forecasts on the Fed’s decisions throughout this year. While some see a rate cut as a potential bullish catalyst, others are divided on the outcome.
Source: Coinbase Institutional
After Powell’s speech, crypto trader Ash Crypto said, “the Fed will start the money printers in Q4 of this year,” along with two rate cuts, which means “trillions will flow into the crypto market.”
“We are about to enter parabolic phase where Altcoins will explode 10x -50x,” Ash Crypto said.
Analyst warns crypto may face short-term pressure
Others suggest that the crypto market may not immediately see the impact of a Fed rate cut.
On April 11, 10x Research head of research Markus Thielen said, “Expecting a bullish impulse is too early.” He said that while a longer-term price opportunity for Bitcoin (BTC) could emerge, it may face short-term pressure driven by recession fears.
Related: BTC climbed to 1.7% of global money before Fed chair signaled rate cut
Meanwhile, some say that if the Fed takes no action this year, it could lead to headwinds for the crypto market.
On March 9, network economist Timothy Peterson warned that if the Fed holds off on rate cuts in 2025, it may cause a broader crypto market downturn.
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