The past ten days or so went quite positively for bitcoin as the asset added almost ten grand within this timeframe, mostly fueled by the US Federal Reserve’s decision to reduce the key interest rates.
However, certain social metrics suggest that the cryptocurrency’s run could be over, at least in the short term.
FOMO to Halt BTC’s Uptrend?
It was just last Wednesday, September 11, when bitcoin’s price tumbled hard after the US CPI numbers came out. At the time, the asset slumped to $55,500. However, it went on the offensive in the following days amid continuous speculation about the Fed’s next move.
A week later, the US central bank decided to pivot from its four-year-long monetary strategy and reduced the interest rates in a move that mimicked the ECB, the Bank of Canada, and the Bank of England.
After the inevitable immediate volatility for BTC and other markets, the cryptocurrency reacted well and gained almost five grand within days, going from $59,500 to a three-week peak of $64,000. Nevertheless, its rally has stopped for now, and the asset is back to just under $63,000.
Data from Santiment suggests that this cooldown could be followed by an even more violent retracement due to social media interactions. FOMO (Fear of Missing Out) levels skyrocketed this week to the fourth highest since the start of the year. Usually, such rapid increases are followed by corrections, as it happened after the ATH in March, and the rallies in early June and late July.
With a very bullish week of crypto transitioning into weekend mode, @santimentfeed has picked up a very bullish crowd sentiment spike. Understandably, the crowd has reason to be optimistic about Bitcoin & others continuing to rise after the Fed’s first rate cuts in 4.5 years.… pic.twitter.com/KTosasj6tS
— Santiment (@santimentfeed) September 21, 2024
Santiment warned that the crypto market is particularly susceptible to such reactions, and it typically tends to go in the opposite direction.
Back to Neutral
The Fear and Greed Index, which gauges different information like social media interactions, price movements, surveys, etc, to determine the current sentiment toward the industry, has increased by 21 points in the past few days.
It was back in a ‘fear’ state (33) on September 17 (the day before the rate cuts) but has risen to a multi-week peak of 54 (neutral). Recall that BTC’s price tanked from $65,000 to under $52,000 within weeks after the last time the index went this high in such a rapid fashion.
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