Crypto analytics agency Santiment reports a rise in "buy the dip" sentiment in the crypto space. Enthusiasm and positivity on the market is beginning to prevail despite, or perhaps thanks to, the latest round of falling prices.
😨 The #buythedip birds are chirping after prices have faded. Last week, just before the #CPI report crash, traders were bragging that they had bought the dip. Now there is legitimate polarization on whether to do it again. What a difference a week makes. https://t.co/eVNkWhktF0 pic.twitter.com/x16xi1W95a— Santiment (@santimentfeed) September 19, 2022
Since Sept. 18, the price of Bitcoin has fallen 7% or more, momentarily reaching June lows. The price of Ethereum, which came under additional pressure due to events surrounding the transition to proof of stake, fell to $1,300, almost offsetting all of the Merge hype growth.
In its report, Santiment nevertheless appeals to similar sentiments that were present only a week ago, before the CPI report. Then, many of those bullish participants were severely punished by the instantaneous fall of the crypto market by almost 10%. Now opinions are divided, but the feeling of finding a new bottom has not disappeared.
What's with Fed rate?
Ahead of Wednesday's FOMC meeting, the Fed is in a cramped state. Although markets are pricing in only a 0.75% hike, following the Fed chief's recent speech, a 1% hike is also possible. On the other hand, given the situation with U.S. debt and its servicing, as well as the liquidity crisis looming on the horizon, the regulator cannot afford too harsh an increase.
There is also an alternative view, suggesting that the Fed will face a backlash to its hawkish monetary policy closer to the end of the year. In any case, as long as the crypto market is so tightly correlated with the near-recessionary U.S. economy, any speculation about a possible bottom seems meaningless.