Social media hype over interest rate cuts hits 11-month high, raising concerns of over-optimism
Crypto traders are closely watching the U.S. Federal Reserve ahead of its September meeting, but rising social media chatter could be a red flag for the market, according to analytics firm Santiment.
Following Fed Chair Jerome Powell’s dovish remarks at the Jackson Hole symposium, optimism surged as he hinted that the first interest rate cut of 2025 could arrive in September. The news fueled a market rally and pushed sentiment back into the “greed” zone.
However, Santiment warns that excessive bullish chatter around a single narrative often signals a potential market top. In a report released Saturday, the firm said mentions of keywords like “Fed,” “rate cut,” and “Powell” have spiked to their highest level in 11 months.
“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 noted.
Analysts Split on Rate Cut Impact
According to the CME FedWatch Tool, 75% of traders expect a September rate cut, a scenario many believe could act as a bullish catalyst for Bitcoin and altcoins.
Crypto influencer Ash Crypto stated on X: “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… Altcoins will explode 10x-50x.”
Not all analysts share this optimism. Markus Thielen, head of research at 10x Research, cautioned that a short-term correction is possible even if cuts materialize: “Expecting a bullish impulse is too early. While the long-term outlook for Bitcoin remains strong, recession fears may create near-term pressure.”
What If the Fed Holds Off?
Some experts warn that no rate cut this year could create headwinds for crypto. Earlier this year, economist Timothy Peterson said that if the Fed delays easing monetary policy, the crypto market could experience a significant downturn.
As anticipation builds, Santiment advises traders to stay cautious amid heightened euphoria, noting that markets often react unpredictably when expectations peak.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.