Bitcoin FOMO turns to FUD – Is September turning bearish for BTC?

“This may be Bitcoin’s [BTC] biggest test yet” is how the market is currently describing the situation.

In just under three weeks, the markets have changed drastically. Back then, it was FOMO, as the Fear & Greed Index peaked at 74, which meant strong greed for investors and coincided with BTC’s $82k reclamation. Now it’s 50, meaning that Bitcoin is precisely in the middle of FUD and FOMO.

Visually, nothing illustrates this better than Santiment’s recent report. From the 19th to the 21st of August, BTC was heading towards $80k, triggering a strong rise in bullish social chatter. Then on the 3rd of September, FOMO peaked again as BTC broke above $80k. However, by the 15th of September, sentiment flipped toward FUD.

Bitcoin fell after the Senate failed to advance the CLARITY Act, while discussions around lower prices reached their highest level for the month.

In short, where the index moves next will set the tone for Bitcoin’s next move. 

It’s here that CryptoQuant’s recent report starts to gain weight. It showed Bitcoin’s Bull Score dropping from 80 to 60 in just one week. That’s a sign that the bullish setup is losing strength, with momentum and market conditions starting to weaken. With the CLARITY Act stalled and the Fed hiking rates for the first time since 2023, the Bull Score adds another warning sign for Bitcoin.

Against this backdrop, ETF outflows and a negative Coinbase Premium Index also start to make sense. They point to weaker US demand and some rotation away from Bitcoin as short-term pullback risks rise. If this trend continues, FUD could end up driving the rest of September for Bitcoin, in turn explaining why the Fear & Greed Index could slide further.

Bitcoin’s bear trap signals point to a sentiment reversal

Interestingly, Bitcoin is showing signs that a bear trap cannot be ruled out.

Just hours before the FOMC decision, a whale opened up a $50 million Bitcoin short, with an entry price near $76k and liquidation around $77k. That triggered a wave of speculation across social media. But technically, BTC is still holding strong around $76k despite the short pressure.

If BTC breaches the $77k level, the position will be liquidated unless the whale closes it early. Thus, there is enough room for a short squeeze to drive prices to the upside. The NUPL metric also supports this scenario. Despite the correction, Bitcoin’s NUPL remains above the red zone, indicating that the market is still sitting on aggregate unrealized profit.

So, while sentiment has weakened, the on-chain data does not yet show broad capitulation.

According to AMBCrypto, this means that FOMO is far from over. If BTC manages to hold key support and the bear-trap signals persist, the Fear & Greed Index could technically shift back towards the greed zone, adding to the upward impulse. This would fuel the reversal of sentiment and bring even more FOMO into the market.

In that case, the current FUD could prove to be a reset rather than the beginning of a bearish trend.

Final Summary