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Crypto market sentiment has shifted into fear as traders brace for more downside but analysts insist the current wave of uncertainty is only temporary. Despite Bitcoin’s recent pullback and altcoin retracements, experts believe the coming weeks could see sentiment improve sharply.
Onchain analytics firm Santiment noted in an X post on Tuesday that chatter among traders has turned bearish with fears of a deeper retrace or even a bear market. Still, it argued markets often move “opposite to the crowd’s expectations” suggesting the current dip in crypto market sentiment could be a contrarian indicator that prices are set to stabilize.
Santiment added that the past couple of weeks of FUD may actually signal resilience, with markets preparing for the next leg higher. Its data showed crypto market sentiment slipped into “Fear” on Sunday but has already recovered to “Neutral” territory.
Some analysts say a potential US Federal Reserve rate cut later this year may act as a major catalyst for improved crypto market sentiment. Financial institutions are projecting at least two cuts in 2025.
Pav Hundal, lead market analyst at Australian exchange Swyftx, told Cointelegraph that all eyes are now on the Fed’s upcoming meeting.
“Any kind of cut could be the next key driver of positivity for crypto market sentiment,” he said.
Hundal added that concerns over bond markets and employment data have triggered a “healthy correction” after extreme optimism at Bitcoin’s all time high. He pointed out that BTC’s rolling 30 day performance is already negative, suggesting weak hands have been flushed out since the $124,000 peak.
Charlie Sherry head of finance at BTC Markets, highlighted that crypto market sentiment often swings to extremes. He argued that Bitcoin reclaiming $117,000 would likely push traders back into bullish territory.
“Bitcoin has broken $100,000 but now people are asking ‘what’s next?’” Sherry said.
“Should Bitcoin reclaim the $117,000 level, sentiment across the crypto market is likely to improve sharply. The recent rebound already suggests that such a shift may be underway.”
He added that
” the rise of crypto treasuries such as Forward Industries’ $1.65 billion Solana focused strategy could also lift crypto market sentiment even if returns may be more modest compared to previous Ethereum treasury gains.”
CK Zheng CIO at ZX Squared Capital, reminded that September is historically the weakest month for equities which naturally makes investors more cautious. Still, he believes crypto market sentiment will rebound depending on macro data like CPI, PPI and the impact of US President Donald Trump’s tariffs.
“Whenever tariffs were announced or implemented in the past, crypto prices dropped sharply,” Zheng noted.
“But just as quickly, sentiment recovered once markets recalibrated.”
For now, while traders remain wary, analysts agree that the downturn in crypto market sentiment is unlikely to last long especially if Bitcoin holds key levels and the Fed delivers policy support.
