Crypto traders have recently shifted toward a more negative outlook, with growing fear, uncertainty, and doubt (FUD), according to on-chain analytics platform Santiment. Analysts, however, believe this shift is likely short-lived.
In a Tuesday post on X, Santiment noted that as Bitcoin’s price fell and altcoins experienced a retracement, traders increasingly discussed selling, a potential market downturn, or a prolonged bear market.
The platform added that markets often move contrary to popular expectations, suggesting that the recent surge in FUD could actually indicate that the feared large-scale retracement may not materialize.
Santiment also reported that crypto market sentiment dipped into “Fear” on Sunday, reflecting signs that investors were temporarily pulling back.
Analysts told Cointelegraph that the current negative sentiment is expected to fade soon, supported by a potential recovery in Bitcoin’s price and the prospect of a US interest rate cut.
US rate cut seen as a major positive driver
Several financial institutions and market analysts predict that the US Federal Reserve could lower interest rates at least twice in 2025.
Pav Hundal, lead market analyst at Australian crypto broker Swyftx, told Cointelegraph that all attention is now on the Fed’s upcoming meeting, noting that any rate cut could serve as “the next key catalyst for positivity.”
He added that concerns over bond markets and job openings have captured investors’ attention, prompting the market to undergo a “healthy correction” after a period of extremely high sentiment.
“We have a euphoria index model that clearly indicates BTC’s most recent all-time high was driven by an overly frothy market,” Hundal explained.
“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.”
Bitcoin reclaiming $117,000 could boost market sentiment
The Crypto Fear & Greed Index, which measures overall sentiment in the crypto market, has remained at “Neutral” since Monday, following several days in the “Fear” zone and an average “Greed” rating recorded last month.
Charlie Sherry, head of finance at crypto exchange BTC Markets, told Cointelegraph that trader sentiment often swings to extremes, and when bearish sentiment dominates, it can signal the end of a downward move rather than its continuation.
“If Bitcoin reclaims $117,000, I expect sentiment to shift quickly; we’ve already seen early signs of this in 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 help shift sentiment back into positive territory is the rise of crypto treasuries, which has prompted companies to compete in accumulating more digital assets.
In a recent example, design and manufacturing firm Forward Industries announced on Monday that it had secured $1.65 billion in cash and stablecoins to launch a Solana-focused crypto treasury strategy. “There is potential for upside in the Solana treasury trade, though returns may be more limited compared with Ether; still, it’s a trend to watch that could turn sentiment positive,” Sherry added.
Traders adopt a cautious stance in September
Meanwhile, ZX Squared Capital co-founder and CIO CK Zheng told Cointelegraph that September has historically been the “worst month in terms of equity returns,” leading investors to naturally adopt a more cautious approach.
However, Zheng noted that the current negative sentiment is likely temporary, with future shifts depending on indicators such as the Consumer Price Index, Producer Price Index, and the impact of US tariffs announced by former President Donald Trump. Previously, Trump’s tariff announcements on multiple countries have weighed on crypto prices, often triggering further declines once implemented.
