FOMO Surges Point to Possible BTC Rally Slowdown After $64K

The last ten days have been quite favorable for bitcoin, with the asset gaining nearly ten thousand dollars, primarily driven by the Federal Reserve’s choice to lower key interest rates.

Nonetheless, certain social indicators imply that the cryptocurrency’s upward momentum might come to a halt, at least temporarily.

Will FOMO Interrupt BTC’s Uptrend?

Just last Wednesday, September 11, bitcoin experienced a significant drop after the US CPI figures were released, plummeting to $55,500. However, in the following days, it rallied amidst ongoing speculation regarding the Fed’s next steps.

A week later, the Federal Reserve shifted away from its four-year monetary strategy and announced an interest rate reduction, aligning its approach with that of the ECB, the Bank of Canada, and the Bank of England.

Following the expected initial volatility affecting BTC and other markets, the cryptocurrency responded positively, rising by nearly five thousand dollars within days, climbing from $59,500 to a three-week high of $64,000. However, the upward trend seems to have paused, with the asset now hovering just below $63,000.

Data from Santiment indicates that this period of cooling might precede a more substantial retracement, prompted by social media activity. FOMO (Fear of Missing Out) levels surged this week to the fourth highest since the year’s start. Typically, such rapid spikes are followed by corrections, as seen after the all-time high in March, and the surges in early June and late July.

After an incredibly bullish week in crypto, heading into the weekend, @santimentfeed detected a notable spike in bullish crowd sentiment. It’s understandable for the crowd to feel optimistic about Bitcoin and others continuing their rise after the Fed’s first rate cuts in 4.5 years.… pic.twitter.com/KTosasj6tS

— Santiment (@santimentfeed) September 21, 2024

Santiment cautioned that the crypto market is particularly reactive to such sentiment shifts, often moving in the contrary direction.

Returning to Neutral

The Fear and Greed Index, which assesses various factors such as social media activity, price fluctuations, and surveys to gauge market sentiment, has risen by 21 points in recent days.

On September 17 (the day prior to the rate cuts), it was in a ‘fear’ state (33), but has surged to a multi-week high of 54 (neutral). It’s worth noting that BTC’s price dropped from $65,000 to below $52,000 in mere weeks the last time the index rose this rapidly.