Discussions about potential cuts in Federal Reserve interest rates have peaked, leading to heightened interest in cryptocurrencies.
Possible Fed Rate Cuts
According to Santiment, keywords like 'Fed,' 'rate,' and 'cut' dominate investor discussions, indicating unusually high optimism. 'Historically, a massive spike in discussion around a single bullish narrative can indicate that euphoria is too high and may signal a market top,' the report states.
Bitcoin and Ethereum Market Metrics
Ethereum reached all-time highs on the Coinbase exchange, while Bitcoin managed to recover back above the $115K mark. During this period, it was observed that the amount of Bitcoin held on exchanges is rising, a trend that has historically preceded selling pressure.
Risks and Caution in Cryptocurrency Markets
Despite market optimism, Santiment notes that Ethereum and Bitcoin are showing weak on-chain metrics. Bitcoin is displaying 'worrying on-chain signs' with daily active addresses cooling off. The long-term MVRV ratio signifies a 'slightly risky zone for new long-term investments'. Ethereum's MVRV also signals a need for caution, despite ETH's recent price jump.
The analysis indicates that while the cryptocurrency market experiences some positive momentum, significant risks are associated with current metrics and asset behavior. Caution is advised for investors.
