“Caution advised”: Crypto market corrects – why Bitcoin and Co. are faltering

• The crypto market is taking a breather after recent price increases following potential interest rate cuts in September. Compared to the previous day, the total market capitalization is down 0.4 percent.
• The Bitcoin price fell slightly by 0.8 percent below the $115.00 mark. On a weekly basis, the leading cryptocurrency has thus lost almost three percent.
• The situation is different for Ethereum. The second-largest cryptocurrency, with a slight increase of one percent, remains close to its all-time high of just under $4,900 set on Friday. Compared to the previous week, the Ether price has risen by six percent.
• Overall, price movements were moderate. Tron recorded the largest increase among the top 10 coins, rising 1.4 percent. Dogecoin, on the other hand, saw the largest price decline, falling 2.5 percent.
• US Federal Reserve Chairman Jerome Powell's speech in Jackson Hole on Friday hit the crypto market like a bombshell. The mere possibility of an imminent interest rate cut was interpreted as a signal that the crypto space could be on the verge of a long uptrend. Analysis firm Santiment has now warned against overly high expectations.
• “Historically, such a massive spike in discussion around a single bullish narrative can indicate that the euphoria is becoming too much and could signal a local top,” the Santiment report states. According to the company, mentions of Fed-related keywords and rate cuts on social media have risen to their highest level in 11 months.
• “While optimism about a rate cut is boosting the market, social media data suggests caution is warranted,” Santiment said.
• So, has the key interest rate decision already been priced in? This could be indicated by the brief but sharp spike in the Fear and Greed Index, which, after a sudden rise into the “greed” range, is now back in the neutral zone.
• Key interest rates, inflation, and real returns are considered drivers for the crypto market – however, the US government deficit and liquidity mechanisms have recently taken center stage. Learn how to identify liquidity dynamics early on and which capital flows are crucial for Bitcoin and other cryptocurrencies here: Macro Guide for Crypto Investors: How to Harness the Drivers Behind the Bitcoin Rally

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Sources

Report from Santiment