Market confidence over a possible Federal Reserve rate cut has pushed crypto prices higher in recent days, but analysts warn that the mood could flip quickly.
According to Santiment, social chatter around the words “Fed,” “rate,” and “cut” has hit an 11-month high, a surge that has historically signaled overly bullish crowd behavior and increased the risk of a sharp pullback.
Social Euphoria Raises Red Flags
Santiment analyst Brian pointed to a classic market pattern: buy the rumor, sell the news. He noted that while ether led recent gains and bitcoin showed strength, the spike in mentions tied to Fed policy may have pushed sentiment toward euphoria.
Positive funding rates and rising chatter can lift prices, yet they also make markets more fragile. When a single theme dominates conversations, history shows that tops can form faster than many expect.
On-chain data add fuel to the Fed caution. Reports show that exchange-held bitcoin has climbed by roughly 70,000 coins since early June, reversing a long-term trend of withdrawals to cold storage.
According to Santiment, that shift could leave more supply ready to hit the market if sentiment turns. At the same time, daily active addresses and transaction volumes have slipped from prior levels, which leaves some core utility indicators looking muted rather than robust.
Bitcoin Technicals Suggest Short-Term Risk
Technically, bitcoin traded around $117,000 as it tried to reclaim the $120,000 mark. Fibonacci analysis places the 0.382 retracement at $114,355, a level already under pressure.
If selling intensifies, downside targets near $108,200 and $103,800 become plausible. The daily chart shows a breach of an ascending trendline and a failed attempt to stay above the supply zone near $120,000, which means risk management is prudent for anyone carrying large positions.
Ethereum Faces Profit-Taking Risk Despite Momentum
Funding rates and MVRV readings add to the careful tone. Based on reports, bitcoin’s long-term MVRV stands at +18.5%, a level that suggests moderate risk for new long-term buys. Positive funding rates indicate that traders are leaning long, so that needle could swing quickly when a catalyst reverses.
Ethereum’s price action looks healthier, trading near $4,755 with a crucial support zone around $4,550. Santiment flagged the short-term MVRV at roughly +15%, a level often seen as a danger zone for altcoin retracements, while the long-term MVRV at +58% points to elevated potential for profit taking.
Featured image from Getty Images, chart from TradingView
