Crypto Traders Eye ‘Bullish Relief Rally’ After Fed Interest Rate Hold

Crypto traders have become hopeful for a market rally after the US Federal Reserve held interest rates steady on Wednesday, according to crypto sentiment platform Santiment.

However, analysts are split on whether a near-term market surge is a reliable signal for traders.

“For now, traders are expecting a bullish relief rally in spite of no changes being made,” Santiment said in an X post on Wednesday, pointing to an increase in bullish sentiment among crypto market participants on social media who are linking the Fed’s steady rates to a potential crypto rally.

The social media discussion score surged from roughly 9 to 71 in the hours after the Fed’s “expected outcome” on Wednesday to hold rates steady at 3.5-3.75%. 

Fed policy is a strong catalyst for Bitcoiners

“This is likely due to the fact that the bearish price action related to the lack of cuts already occurred yesterday,” Santiment said.

Fed policy has historically been a major catalyst for optimism among crypto market participants, with traders eyeing rate cuts in 2025 as a signal for a possible bull year for Bitcoin. 

However, a pause in rates can increase expectations that cuts could come next.

Several analysts said they are expecting a crypto rally, but they are divided on how long it could last.

“Bull trap” may be on the horizon

Bitcoin (BTC) onchain analyst Willy Woo recently warned that a potential “bull trap” may be forming, a false signal that Bitcoin is entering an uptrend before reversing lower.

Bitcoin has fallen 4.35% over the past 24 hours, trading at $70,790 at the time of publication, according to CoinMarketCap. 

Meanwhile, crypto analyst Matthew Hyland said that Bitcoin and the broader crypto market will “see a significant rally” once the stock market finds its low and rebounds. The S&P 500 has fallen 3.73% over the past 30 days, according to Google Finance.

Echoing a similar sentiment, crypto trader Moustache said in an X post on Monday, “What you’ll see in the coming months is a massive rally.”

Related: ‘Rich Dad, Poor Dad’ author says ‘pin is near’ on TradFi ‘bubble burst:’ Predicts $750K Bitcoin

Other indicators suggest that crypto investors are still taking a cautious approach to the market.

The Crypto Fear & Greed Index, which measures overall crypto market sentiment, fell back into “Extreme Fear” territory on Wednesday, after briefly moving up into “Fear” the day prior.

Magazine: Big Questions: Can Bitcoin save you from the dreaded Cantillon Effect?