The optimism surrounding the potential Federal Reserve (FED) rate cut and its anticipated ability to spark a massive crypto rally has dominated market sentiment recently.
However, crypto intelligence platform Santiment has cautioned that this “buy the rumor, sell the news” mentality could present significant risks for investors.
During the latest edition of “This Week in Crypto Market Analysis,” Santiment analyst Brian highlighted how the crypto market demonstrated remarkable resilience.
Following Fed Chair Jerome Powell’s dovish remarks at Jackson Hole, where he suggested the possibility of rate reductions, Ethereum emerged as the standout performer, leading this market surge.
Brian observed that ETH achieved a new all-time high, placing the entire crypto ecosystem on edge for what could be a historic breakout moment.
Meanwhile, Bitcoin continues its consolidation phase, maintaining levels around $117,000 as it attempts to recapture the crucial $120,000 threshold.
Although these developments suggest the market is positioned for a significant upward breakthrough, social sentiment data from Santiment indicates that caution may be necessary.
Discussion around terms such as “Fed,” “rate,” and “cut” across social media platforms has reached an 11-month peak.
Historical patterns show that such dramatic increases in conversation around a single bullish theme often suggest euphoria levels are becoming excessive and could indicate a local market top.
The analyst presented a distinctive sentiment indicator that monitors the balance between comments anticipating “higher” prices versus those expecting “lower” movements.
Bitcoin’s blockchain metrics present a neutral-to-cautious outlook.
Essential utility indicators, including daily active addresses and transaction volumes, have declined from previous levels.
The long-term Market Value to Realized Value (MVRV) ratio, which gauges holder profitability, currently stands at +18.5%, placing it within a moderately risky territory for fresh long-term positions.
Furthermore, positive funding rates show that traders are increasingly wagering on price appreciation.
Among the most troubling on-chain developments Santiment highlighted for Bitcoin is the growing supply accumulation on exchanges.
Since early June, exchange-held BTC has risen by approximately 70,000 coins, a significant departure from the sustained pattern of assets moving into cold storage, potentially indicating that more holders are preparing to liquidate positions.
Ethereum Shows Promise but Carries Risks
While Ethereum’s price performance appears encouraging, its MVRV metrics suggest exercising caution is advisable.
The short-term (30-day) MVRV is nearing +15%, a threshold recognized as a “danger zone” where altcoins frequently experience retracements.
More concerning is the long-term MVRV reading of +58.5%, which substantially elevates the probability of profit-taking activities.
In his concluding remarks, Brian indicated that Ethereum maintains strong prospects for surpassing its all-time high and advancing toward $5,000, particularly since widespread fear of missing out (FOMO) has not yet materialized.
Nevertheless, the primary threat to market stability remains the Federal Reserve narrative.
Should any developments emerge that contradict rate cut expectations, the market could experience rapid corrections.
Technical Analysis: Bitcoin Risks Correction to $104,000
Bitcoin’s daily chart reveals evident weakness following its failure to sustain levels above the critical resistance zone near $120,000.
The analysis shows a breakdown from the ascending trendline, confirming a momentum shift, with price now retesting the broken support area that has transformed into resistance.
Fibonacci retracement levels have been mapped, with the 0.382 level at $114,355 already under pressure, while deeper downside objectives around $108,200 and $103,800 become viable if selling intensifies.
The rejection from the supply zone, combined with the trendline support breach, suggests Bitcoin is more likely to trend downward in the near term.
Bearish targets remain on the $108,000–$104,000 range unless buyers can decisively reclaim $120,000.
Ethereum Chart Analysis: $4600 Support Crucial for $5,000 Breakout
Ethereum is consolidating within a wedge formation on the 4-hour timeframe following a substantial upward move, with price currently positioned near $4,740.
The technical structure points to a potential short-term decline toward $4,600, which corresponds to a constructive retest zone for establishing new long positions.
The Relative Strength Index (RSI) hovers around 63, indicating strength without reaching overbought conditions, leaving scope for additional upward momentum once the anticipated pullback concludes.
If support is maintained at $4,600, subsequent targets are projected at $5,006 and $5,210, levels identified as significant resistance overhead.
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