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The optimism surrounding the potential Federal Reserve (FED) rate cut and its anticipated ability to spark a massive crypto rally has dominated market sentiment recently.
However, crypto intelligence platform Santiment has cautioned that this “buy the rumor, sell the news” mentality could present significant risks for investors.
During the latest edition of “This Week in Crypto Market Analysis,” Santiment analyst Brian highlighted how the crypto market demonstrated remarkable resilience.
Following Fed Chair Jerome Powell’s dovish remarks at Jackson Hole, where he suggested the possibility of rate reductions, Ethereum emerged as the standout performer, leading this market surge.
Brian observed that ETH achieved a new all-time high, placing the entire crypto ecosystem on edge for what could be a historic breakout moment.
Meanwhile, Bitcoin continues its consolidation phase, maintaining levels around $117,000 as it attempts to recapture the crucial $120,000 threshold.
Although these developments suggest the market is positioned for a significant upward breakthrough, social sentiment data from Santiment indicates that caution may be necessary.
Discussion around terms such as “Fed,” “rate,” and “cut” across social media platforms has reached an 11-month peak.
Source: Santiment
Historical patterns show that such dramatic increases in conversation around a single bullish theme often suggest euphoria levels are becoming excessive and could indicate a local market top.
The analyst presented a distinctive sentiment indicator that monitors the balance between comments anticipating “higher” prices versus those expecting “lower” movements.
Bitcoin’s blockchain metrics present a neutral-to-cautious outlook.
Essential utility indicators, including daily active addresses and transaction volumes, have declined from previous levels.
The long-term Market Value to Realized Value (MVRV) ratio, which gauges holder profitability, currently stands at +18.5%, placing it within a moderately risky territory for fresh long-term positions.
Source: Santiment
Furthermore, positive funding rates show that traders are increasingly wagering on price appreciation.
Among the most troubling on-chain developments Santiment highlighted for Bitcoin is the growing supply accumulation on exchanges.
Since early June, exchange-held BTC has risen by approximately 70,000 coins, a significant departure from the sustained pattern of assets moving into cold storage, potentially indicating that more holders are preparing to liquidate positions.
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