Fed not cutting rates ‘at all’ in 2025 may trigger a bear market — Analyst
Network economist Timothy Peterson has raised concerns that the US Federal Reserve’s decision to refrain from interest rate cuts in 2025 could trigger a more extensive market downturn, potentially pushing Bitcoin back toward the $70,000 mark. In a post on March 8, Peterson stated, “What it needs is a trigger. I think that trigger may be as simple as the Fed not cutting rates at all this year.” This remark followed Federal Reserve Chair Jerome Powell’s comments emphasizing a cautious approach to monetary policy adjustments.
The possibility of a prolonged period without interest rate cuts has sparked fears of a bear market. Powell remarked, “We do not need to be in a hurry and are well-positioned to wait for greater clarity,” reinforcing the Fed’s focus on patience at a recent New York speech.
Peterson, renowned for his analysis on Bitcoin’s valuation through the lens of Metcalfe’s Law, has made predictions regarding Bitcoin’s potential price trajectory based on anticipated movements in the Nasdaq index. He suggests that if the Nasdaq were to drop by 17% over a span of seven months—a figure derived from his forecasting model—Bitcoin could see a similar decline, potentially falling by 33%. This would place Bitcoin at approximately $57,000, significantly below its current valuation of around $86,199, as reported by CoinMarketCap.
Despite this bearish outlook, Peterson is hesitant to believe that Bitcoin would reach such lows. He anticipates that the cryptocurrency might stabilize closer to the $70,000 range, taking cues from historical price behaviors. “Traders and opportunists hover over Bitcoin like vultures,” he noted, suggesting that as sentiment shifts toward expecting lower prices, investors might rush to buy, preventing a severe drop.
Reflecting on past market behavior, Peterson recalled that in 2022, many speculated that Bitcoin’s bottom would hit $12,000, yet it only fell to around $16,000—25% higher than forecasts. He posits that a similar situation could occur now, with Bitcoin possibly stabilizing around $71,000, given historical precedents.
The last recorded trading of Bitcoin near this threshold occurred on November 6, shortly after Donald Trump’s election victory, before it surged to $100,000 by December 5.
Echoing these sentiments, BitMEX co-founder Arthur Hayes has also made price predictions for Bitcoin in early 2025, forecasting a potential correction to the range of $70,000 to $75,000. He anticipates that this may be part of a broader mini financial crisis, which could eventually lead to a significant resurgence in Bitcoin’s value, aiming for $250,000 by year-end.
In contrast, firms like Blockware Solutions have speculated that if the Federal Reserve opts to reverse its course on interest rate cuts, Bitcoin’s “bear case” for 2025 could reach as high as $150,000, highlighting the complex interplay of monetary policy and market expectations in shaping cryptocurrency valuations.
