Bitcoin Sentiment Hits 2-Year High As Spot Demand Rises: Is A Market Turn Coming?

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/2098670423323853133Sentiment Index Hit Extremes 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 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.The Macro Catalyst At PlayOn Friday, the Bureau of Labor Statistics data showed that  in 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 StoryAccording 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  fell 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 Yet To Reclaim 80KBitcoin 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%. was 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.