- CryptoQuant’s Unified Sentiment Index climbed above 89, according to analyst Darkfost.
- Darkside sentiment is already cooling from extreme greed levels, which can sometimes indicate a market turning point.
- Bitcoin spot momentum fell 30% over the past week, while spot volume for the cryptocurrency has risen nearly 10% in the last 24 hours.
Bitcoin’s (BTC) rally is hitting a warning sign where investors have reached its most euphoric level since March 2024, as spot demand begins to wane and macro pressure mounts. The market sentiment index has already started cooling after crossing 89 on a scale of -100 to +100, prompting questions on whether Bitcoin is approaching another major turning point, said CryptoQuant analyst Darkfrost on Saturday.
Darkfost shared the reading on Friday, where he pointed to CryptoQuant’s unified sentiment index, which climbed above 89. The index runs on a scale of -100 to +100, meaning a reading above 89 sits deep in what the chart labels as “extreme greed.” https://x.com/Darkfost_Coc/status/2098670423323853133
The last time the index was this hot was in March of 2024, Darkfost added. He also said that these measurements “offer little insight” when the market is down. They tend to spend a lot of time in negative territory. They are worth watching when the trend turns, he said.
The analyst said extreme readings, either way, typically
The analyst said extreme readings, either way, typically signal a pivot point for the market. According to Darkfost, while Bitcoin attempted to maintain its current levels, sentiment was already declining toward more normal levels following the euphoric spike.
On Friday, the Bureau of Labor Statistics data showed that inflation continued to risein August by 0.4% month over month. The Consumer Price Index (CPI) was up 3.4% year over year. According to the CME FedWatch tool, now over 87% of markets are pricing in an upcoming rate hike of 375-400 bps. This is key market data for traders to watch, as it is the last reading before Fed Chair Kevin Warsh announces a rate hike this Wednesday.
Whenever interest rates rise, they typically put downward pressure on Bitcoin by tightening global liquidity. In the short term, Bitcoin’s price depends on whether the hike is already priced in. Historically, the asset has been under pressure with higher rate hikes. In 2024, when the Fed lowered rates to 4.5% by December, liquidity expectations improved, and Bitcoin closed the month at $93,000.
Spot Demand Tells Different Story
According to Glassnode data, Bitcoin’s 24 hour spot
According to Glassnode data, Bitcoin’s 24 hour spot volume has shown positive signs, rising nearly 10% at $6.9 billion, as of writing. Earlier this week, Glassnode data showed Bitcoin spot momentumfell 30% over the past week. Spot volumes were stable at $5.3 billion, and the spot cumulative delta improved to -$29.6 million from -$84.9 million.
Bitcoin has been struggling to break past its current support level of $81,000, which it reached in the first week of September, and has been down over 3% since then. The most recent macro catalyst was August’s non-farm payrolls data showing 162,000 jobs added, three times the forecast. The unemployment rate was at 4.1%.
Bitcoin’s pricewas trading around $77,000 at the time of writing. On Stocktwits, the retail sentiment around BTC dipped to the ‘extremely bearish’ zone from the ‘bearish’ zone, while the chatter levels remained at ‘low’ levels over the past 24 hours.
