Crypto traders have swung into more negative sentiment and deeper fear, uncertainty, and doubt (FUD), according to the onchain analytics platform Santiment, but analysts say it’s likely only temporary.
Santiment said in an X post on Tuesday that with the price of Bitcoin (BTC) falling, and altcoins going through a retrace period, traders have been increasingly talking about selling, the market sinking lower or a bear market.
It added that markets often “move opposite to the crowd’s expectations,” so the last “couple of weeks of FUD is an encouraging sign that this feared large retrace will never actually happen.”
Crypto market sentiment slipped into Fear on Sunday and showed signs that investors were temporarily stepping back, according to Santiment.
Analysts told Cointelegraph that the negative sentiment will likely pass soon, as the price of Bitcoin recovers and a possible US rate cut is on the horizon.
US rate cut key catalyst for positivity
Some financial institutions and market analysts are projecting the US Federal Reserve will slash interest rates at least twice in 2025.
Pav Hundal, lead market analyst at Australian crypto broker Swyftx, told Cointelegraph all eyes are now on the Fed’s meeting next week, with a cut of any kind possibly being “the next key catalyst for positivity.”
He added worries around bond markets and job openings have got the market’s attention, and it’s just recalibrating with a “healthy correction” after coming off very high sentiment.
“We have a euphoria index model that very clearly shows BTC’s most recent all-time high was the product of a frothy market,” Hundal said.
“The rolling 30-day performance of Bitcoin is negative and that suggests we’ve already gone through a correction, which will have shaken out a lot of weak hands since we hit the $124,000 top.”
$117K breakout may turn Bitcoin sentiment bullish
The Crypto Fear & Greed Index, which tracks the broader crypto market sentiment, has been at “Neutral” since Monday after several days in “Fear” and registering an average rating of “Greed” last month.
Charlie Sherry, head of finance at the BTC Markets crypto exchange, told Cointelegraph that trader sentiment tends to go extremes in both directions. When traders lean heavily bearish, it can often mark the end of that move rather than the start.
“If Bitcoin reclaims $117,000, I think sentiment would swiftly swing back; we have already seen early signs of that on Bitcoin’s recent bounce to current levels,” Sherry said.
“Bitcoin has broken the $100,000 barrier and now there is a bit of a question of ‘what next?’ $200,000 is the next high time frame major target, but that certainly seems a long way away, both time and price-wise, so there is more uncertainty short term.”
Another factor that could swing sentiment back into positive is crypto treasuries, which have sparked companies into a race to accumulate more crypto.
In one of the latest instances, design and manufacturing firm Forward Industries said on Monday it had secured $1.65 billion in cash and stablecoins to launch a Solana (SOL) focused crypto treasury strategy.
Related: How to read market sentiment with ChatGPT and Grok before checking a chart
“There is potential for upside in the Solana treasury trade, but perhaps the returns will be more compressed than what we saw with Ether; but that is a trend to watch that could flip sentiment positive,” Sherry added.
Traders more cautious in September
Meanwhile, ZX Squared Capital co-founder and chief investment officer CK Zheng told Cointelegraph that September, on average, has historically been the “worst in terms of equity return. So people naturally tend to be more cautious.”
However, he also thinks the negative trader sentiment is only temporary and a shift will depend on factors such as the Consumer Price Index, the Producer Price Index, and how much of an impact US President Donald Trump’s tariffs have.
In the past, when Trump announced tariffs on a raft of countries, crypto prices dropped. The market dropped again when the tariffs started to come into force.
Magazine: Astrology could make you a better crypto trader: It has been foretold