Crypto markets vibrate to the rhythm of the federal reserve. While Jerome Powell talks about a possible drop in rates in September, Santiment is sounding the alarm. Could the current euphoria hide a trap for investors?
In short
- Santiment observes a record increase in “Fed” mentions and “drop in rates” on social networks, unheard of in 11 months.
- 75 % of market players anticipate a drop in rates in September, according to the Fedwatch tool.
- Analysts remain divided on the real impact of a drop in rates on cryptos.
An excitement of social networks that worries analysts
Santiment, a platform recognized for its market feeling analysis, published a report on the alarming tone on Saturday. Following Jackson Hole's Jackson's symposium, keywords like “Fed”, “rate”, “decrease” and “Powell” literally exploded on social networks. They have now reached their highest level for almost a year.
This effervescence comes in a particularly promising context for cryptos. On Friday, Bitcoin crossed the $ 116,000, while the Fear & Greed index jumped from 50 to 60 in just twenty-four hours, before falling.
The atmosphere is euphoria: Crypto markets surf on the optimism aroused by Powell, which recognized that an adjustment of monetary policy could be justified.
However, Santly calls for restraint ::
Historically, such a massive increase in discussions around a single bullish speech may indicate that euphoria is too strong and can point out a local peak. .
This call for caution contrasts with the dominant enthusiasm, while 75 % of traders, according to the Fedwatch tool of the CME, anticipate a drop in rates in September.
In the current context, this signal takes a particular resonance. American public debt has crossed the $ 37,000 billion mark, fueling doubts about the solidity of the dollar.
Faced with this fragility, investors turn massively to the cryptos perceived as a credible alternative. However, this rush towards Bitcoin and Ether could hide a danger: that of a market too quickly grayed out, whose momentum is likely to run out brutally.
Santiment exposes the risks of the Fed-Cryptto obsession
The reactions of Crypto analysts reveal a contrasting landscape. On the one hand, some experts see a possible drop in rates a major catalyst for the sector.
Ash Crypto, a recognized trader, predicts that the Fed will begin to print money in the fourth quarter and that thousands of billions will flock to the cryptos market. It even goes so far as to anticipate a parabolic phase where altcoins will explode 10 to 50 times.
This optimistic vision Bases on an established economic logic: lower rates reduce the opportunity to have unpaid assets such as Bitcoin. In addition, the potential weakening of the dollar would mechanically strengthen the attraction for digital currencies as an alternative value reserve.
However, some analysts call for caution. Markus Thielen, director of research at 10x Research, already estimated in April that it was premature to bet on a real upward impulse.
According to him, even if a long -term opportunity could emerge for Bitcoin, the market could undergo short -term pressure powered by recession fears.
This analysis joins the concerns of Timothy Peterson, network economist, who warned in March that any delay in the rate reductions could cause a slowdown in the crypto market.
These discordant voices recall that cryptocurrencies remain closely linked to traditional economic cycles, despite their status of “alternative” assets.
In short, the excitement observed around Powell's announcements testifies to the central place of monetary policy in the trajectory of cryptos. Yes, a drop in rates could open a new bullish phase. But if the euphoria gets carried away too quickly, the shock of a Fed's opposite feature could be brutal. Investors would do well to keep a cool head.
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