According to data from the on-chain analysis platform Santiment, cryptocurrency traders have shifted to a more negative sentiment and deeper fear, uncertainty, and doubt (FUD), but analysts suggest this may only be temporary.
Santiment stated in a post on X on Tuesday that as Bitcoin (BTC) prices decline and altcoins experience a correction period, traders are increasingly discussing sell-offs, further market declines, or a bear market.
The platform added that the market often "operates contrary to public expectations," and thus the "FUD of the past few weeks is an encouraging sign that a significant correction of this concern may never actually happen."
According to Santiment's data, cryptocurrency market sentiment slipped into the fear range on Sunday, indicating signs of a temporary retreat among investors.
Analysts told Cointelegraph that as Bitcoin prices rebound and the possibility of interest rate cuts in the U.S. looms, negative sentiment may soon pass.
Some financial institutions and market analysts predict that the Federal Reserve will cut interest rates at least twice in 2025.
Pav Hundal, chief market analyst at Australian cryptocurrency broker Swyftx, told Cointelegraph that all eyes are now on the Federal Reserve's meeting next week, where any form of rate cut could become "the next key catalyst for positive sentiment."
He added that concerns over the bond market and job vacancies have drawn market attention, and the market is merely undergoing a "healthy adjustment" and recalibration after experiencing extremely high sentiment.
Hundal stated, "We have a fervor index model that clearly shows BTC's recent historical highs are products of a bubble market."
The cryptocurrency fear and greed index, which tracks broader cryptocurrency market sentiment, has been in a "neutral" state since Monday, after being in a "fear" state for several days, with an average rating of "greed" last month.
Charlie Sherry, CFO of cryptocurrency exchange BTC Markets, told Cointelegraph that trader sentiment often swings to extremes in both directions, and when traders are severely bearish, it often marks the end of that trend rather than the beginning.
Sherry said, "If Bitcoin recovers to $117,000, I think sentiment will quickly turn around; we have already seen early signs of this when Bitcoin recently rebounded to current levels."
Another factor that could turn sentiment back to positive is the crypto treasury, which has sparked a race for companies to accumulate more cryptocurrencies.
In the latest case, design and manufacturing company Forward Industries announced on Monday that it has secured $1.65 billion in cash and stablecoins to launch a crypto treasury strategy focused on Solana (SOL).
Sherry added, "Solana treasury trading has upside potential, but the returns may be more compressed than what we see on Ethereum; however, this is a trend worth watching that could turn sentiment positive."
Meanwhile, CK Zheng, co-founder and chief investment officer of ZX Squared Capital, told Cointelegraph that September has historically been "the worst month for stock returns on average." So people naturally tend to be more cautious.
However, he also believes that traders' negative sentiment is only temporary, and the shift will depend on factors such as the consumer price index, producer price index, and the impact of U.S. President Donald Trump's tariff policies.
In the past, Trump's announcement of tariffs on a range of countries has negatively impacted cryptocurrency prices and caused further losses upon implementation.
Related: Bitcoin (BTC) falls due to weak U.S. employment data, but is still expected to rise to $185,000 in the fourth quarter.
Original article: “Analysts say the current fear sentiment among cryptocurrency traders won't last long”
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