Analysts: Fed Rate Cut Euphoria May Spark Crypto Pullback
Analysts warn that growing optimism over a Fed rate cut has lifted crypto prices but could backfire as historic patterns show “buy the rumor, sell the news.” Social chatter around “Fed,” “rate,” and “cut” has hit an 11-month high, signaling euphoria and higher pullback risk. On-chain data reveals exchange-held BTC has risen by 70,000 coins since June, reversing the withdrawal trend and potentially flooding the market if sentiment shifts. Daily active addresses and transaction volumes have declined. Technically, Bitcoin trading near $117,000 faces resistance at $120,000, with downside targets at $114,355, $108,200, and $103,800. Long-term MVRV for Bitcoin stands at +18.5%, while Ethereum’s short- and long-term MVRV at +15% and +58% suggest profit-taking risk. Funding rates point to a long bias amid Fed rate cut speculation, underlining the fragility of current gains. Traders should monitor policy cues and enforce strict risk management.
Bearish
The article’s cautionary tone and on-chain indicators suggest a bearish impact on the crypto market. The surge in social chatter around Fed rate cut hopes echoes past episodes—such as the January 2023 echoes of Fed pivot rumors—that prompted rapid rallies followed by sharp pullbacks when no policy change materialized. The significant 70,000 BTC inflow to exchanges, declining activity metrics and high MVRV readings for Bitcoin and Ethereum all point to elevated profit-taking risk. Technically, Bitcoin’s failure to reclaim the $120,000 zone and looming support tests at $114,355, $108,200 and $103,800 increase downside vulnerability. As funding rates remain positive, a sudden reversal in Fed rate cut expectations could trigger a sell-off. Both short-term risk management and cautious position sizing are advised, reinforcing a bearish outlook in the near term.