Bitcoin News Today: Fed Rate-Cut Chatter Spikes 11-Month High Crypto Market Grows Overbought

The surge in discussions surrounding potential U.S. Federal Reserve rate cuts has sparked renewed optimism in the cryptocurrency market. Santiment, a leading blockchain analytics firm, has issued a cautionary warning, suggesting that the sharp rise in social media chatter related to Fed policy may indicate an overbought market and could precede a short-term peak. The firm noted that such spikes in bullish narratives historically correlate with market euphoria and could signal a local top [1].

This heightened enthusiasm followed remarks from Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Symposium, where he hinted at potential rate cuts in 2025. As a result, major cryptocurrencies such as Bitcoin and Ethereum saw sharp price gains, with Ethereum reaching a four-year high. The CME FedWatch Tool indicated that approximately 77% of market participants now anticipate a rate cut in September, reflecting growing expectations of a Fed pivot toward easing monetary policy [3].

Santiment emphasized that the recent surge in “Fed rate cut” keywords on social media has reached an 11-month high. While optimism about a rate cut is fueling the market, the firm warned that such rapid sentiment shifts can also signal caution is warranted [1]. The report highlighted the correlation between rising crypto prices and Fed policy signals, underscoring the crypto market’s high sensitivity to macroeconomic cues.

Market sentiment has shifted toward greed, with many participants attributing the rally to expectations of a Fed rate cut. Santiment noted that historically, such levels of optimism can precede consolidation or correction phases, reinforcing the need for investors to remain cautious amid the bullish momentum [5].

In addition, the broader economic outlook remains mixed. While the Fed is increasingly seen as heading toward a rate-cutting cycle, inflation remains above the 2% target, and the timing of the first cut remains uncertain. Analysts are divided on the potential impact of a Fed rate cut, with some viewing it as a bullish catalyst and others questioning its immediate effect on crypto markets [1].

Some industry experts, such as Markus Thielen of 10x Research, have argued that the initial rate cut may not immediately boost crypto prices, as it could also signal economic weakness. Thielen noted that while Bitcoin could benefit in the long term from a recessionary environment, short-term headwinds are likely. “Bitcoin first sells off when China devalues or the Fed cuts, as the first cut might not be so impactful and also confirms economic weakness,” he said [1].

Meanwhile, economist Timothy Peterson has warned that a failure to cut rates in 2025 could lead to a severe downturn in the crypto market, potentially dragging Bitcoin below $100,000. “What it needs is a trigger. I think that trigger may be as simple as the Fed not cutting rates at all this year,” he stated [1].

The evolving sentiment is also reflected in on-chain activity and institutional interest. For example, XRP’s recent price breakout above $3 triggered a notable increase in trading volume, attributed in part to Fed policy signals and increased on-chain activity [6]. This trend suggests that institutional investors are also positioning for a potential rate-cutting cycle.

In summary, while the Fed’s potential shift toward rate cuts has ignited optimism in the crypto market, Santiment’s analysis serves as a reminder of the risks associated with overbought conditions. Investors are advised to remain cautious, as historical patterns suggest that sharp rises in sentiment and social media chatter often precede market corrections. Continued monitoring of Fed communications and broader macroeconomic data is essential for assessing the true trajectory of monetary policy and its implications for the crypto market [1][3][5].

Source: [1] Fed Rate-Cut Chatter Hits 11-Month High as Crypto Market Grows Overbought (https://www.ainvest.com/news/fed-rate-cut-chatter-hits-11-month-high-crypto-market-grows-overbought-2508/)

[3] Ethereum News Today: Fed Easing Signals Spark 77% Crypto Rally (https://www.ainvest.com/news/ethereum-news-today-fed-easing-signals-spark-77-crypto-rally-chances-short-liquidations-200-2508/)

[5] Crypto Sentiment Returns to Greed as Bitcoin and Ether Rally (https://www.fastbull.com/news-detail/crypto-sentiment-returns-to-greed-as-bitcoin-and-news_6300_0_2025_3_8321_3)

[6] XRP Surges 9% Before Pullback Caps Rally Near $3 (https://www.coindesk.com/markets/2025/08/23/xrp-surges-9-before-pullback-caps-rally-near-usd3)