Bitcoin's 94K Breakout: Is FOMO Returning or a Trap Set by the Sharks?

Ahead of the upcoming Fed interest rate decision, Bitcoin is experiencing a notable rebound, with the price reaching $94,625 on Tuesday—its highest in three weeks. This has sparked a wave of positive sentiment on social media, but is this the start of a sustainable bullish trend, or just a trap set by big investors?

What is FOMO and why is it dangerous in the crypto market?

FOMO (Fear of Missing Out) is a common psychological phenomenon where retail traders are driven to make trades under the pressure of JOMO (Joy of Missing Out), and CME Group futures indicate an 88.6% probability that the Fed will cut interest rates by 0.25% on Wednesday. As Bitcoin breaks above 94K, social media posts about “going higher” and “breaking through” surge, according to blockchain analytics firm Santiment.

However, Santiment also warns that positive sentiment on social media is not always a bullish signal. Markets often move contrary to retail traders’ behavior, and excessive FOMO signals can indicate an impending top.

Rapid cooling and warning signs

Immediately after reaching its monthly high, Bitcoin’s price plummeted to $92,400 at the time of analysis—within just a few hours. This rapid volatility has analysts concerned that the rally may be a price manipulation stunt rather than genuine market participation.

Long-time investor “NoLimit” shared observations that this breakout bears all the hallmarks of a pump-and-dump scheme. He pointed out that thin order books make it cheap to push prices up, large buy orders are executed in a very short time, then nothing follows through. “This is exactly how big players create FOMO to unload at better prices,” he explained.

Key factor: Tomorrow’s FOMC meeting

The Federal Open Market Committee (FOMC) meeting on Wednesday will be a critical point. If the rate cut of 0.25% proceeds as expected, Bitcoin could benefit. However, if the Fed shows hesitation or signals a pause in future cuts, it could spell disaster for the crypto market.

Jeff Mei, COO at BTSE exchange, shared: “Bitcoin may be rallying based on expectations of rate cuts, but it’s currently very uncertain what will happen after tomorrow’s Fed meeting.”

CME futures markets show only a 21.6% chance of another 0.25% cut in January, indicating expectations for easing monetary policy are waning.

Uncertainty ahead of the FOMC

Analyst Sykodelic commented that any price volatility before the FOMC is highly unpredictable, as Wednesday will be an extremely volatile trading day. The biggest risk is that the Fed’s outlook could include hesitation to further cut rates, which has happened before and led to Bitcoin’s crash afterward.

Conclusion

Bitcoin’s breakout above 94K looks impressive but is fraught with warning signs. FOMO sentiment is spreading on social media, but experience shows that when retail traders rush to buy en masse, it’s often when big whales start to dump. The FOMC meeting tomorrow will be the ultimate determinant, but investors should prepare for both bullish and bearish scenarios.