Fed’s ‘Juice’ into Crypto Signals Time to Sell, Warns Analyst

The recent interest rate cut by the United States Federal Reserve may have already been priced into the crypto market, leading some analysts to suggest it could be time to consider selling. Aurelie Barthere, principal research analyst at blockchain analytics firm Nansen, noted that the Fed’s decision on the rate cut simply aligned with market expectations. In a report shared on September 23, Barthere emphasized that the Fed was catching up with what the market had already anticipated.

Barthere also added that maintaining some crypto allocation or “skin in the game” still makes sense as the Fed’s move has injected more momentum into the bull market. However, she advised caution, stating that much of the optimism has already been reflected in the current price of risk assets. As a result, Nansen’s strategy involves “trimming” crypto holdings during market rallies to avoid downside risks.

Following the Fed’s rate cut, market sentiment quickly turned positive. The Crypto Fear & Greed Index, a key measure of investor sentiment, climbed from the “fear” zone to a “greed” score of 59, a significant increase from its previous score of 45.

Bitcoin’s price reacted strongly to the announcement, rising above $60,000 for the first time since late August and nearing $65,000 several times in the following week. On September 25, Bitcoin was trading at $63,759. The Fed’s decision marks its first rate cut since the pandemic-driven cut in March 2020. Some experts, including BitMEX co-founder Arthur Hayes, warn that the rate cut could trigger market instability by reducing the interest rate gap between the US dollar and the Japanese yen.