Institutional bets and Fed cues could flip crypto's fear to greed

Crypto traders have shifted into a more negative sentiment, marked by heightened fear, uncertainty, and doubt (FUD), according to Santiment, an onchain analytics platform. The firm noted that as Bitcoin (BTC) prices decline and altcoins experience retracement, traders are increasingly vocal about selling or anticipating a broader bear market. However, analysts argue that this phase of fear is likely temporary, with the market historically reacting in the opposite direction of short-term sentiment.

The Crypto Fear & Greed Index, a broader indicator of market sentiment, moved back to neutral territory after several days in "Fear," following a period of "Greed" last month. This shift suggests that investors are cautiously stepping back, but not necessarily abandoning the market. Analysts believe that if Bitcoin can reclaim the $117,000 level, sentiment is likely to shift back to optimism. Charlie Sherry of BTC Markets emphasized that extreme bearish sentiment often signals the end of a downswing, not the beginning, and early signs of a recovery have already emerged.

The potential for a U.S. Federal Reserve rate cut in 2025 is another factor that could influence a positive shift in sentiment. Pav Hundal of Swyftx noted that the Fed's next meeting is a critical event, as any rate cut could act as a catalyst for renewed bullish momentum in the crypto market. The broader financial markets are already showing concerns over bond markets and job openings, leading to a "healthy correction" following a period of euphoric highs.

Beyond macroeconomic factors, crypto treasuries are also influencing sentiment. Forward Industries, a design and manufacturing firm, recently announced a $1.65 billion Solana (SOL) focused treasury strategy, highlighting growing institutional interest in crypto assets. Sherry added that while the Solana treasury trade might offer compressed returns compared to Ether, it remains a trend worth watching that could flip sentiment in a positive direction.

September, historically known for underperformance in equity markets, has seen traders adopt a more cautious stance. CK Zheng of ZX Squared Capital noted that while sentiment may remain negative in the short term, a shift will depend on macroeconomic indicators like the Consumer Price Index and the Producer Price Index, as well as potential impacts from U.S. President Donald Trump’s proposed tariffs. Past tariff announcements have historically dented crypto prices, adding another layer of uncertainty to short-term sentiment.

Despite the temporary fear, analysts remain cautiously optimistic. The market’s tendency to swing between extremes means that a return to bullish sentiment could be imminent, especially if Bitcoin continues its recovery and key resistance levels are breached. For Solana, the combination of whale activity, institutional interest, and network upgrades such as the Alpenglow upgrade, suggest a strong foundation for future growth. These factors reinforce the view that the current fear among traders is unlikely to persist for long.

Santiment. (n.d.). Retrieved from [https://cointelegraph.com/news/rypto-sentiment-drops-but-recovery-expected](https://cointelegraph.com/news/rypto-sentiment-drops-but-recovery-expected)

CFGI.io. (n.d.). Retrieved from [https://cfgi.io/solana-fear-greed-index/](https://cfgi.io/solana-fear-greed-index/)