Network economist Timothy Peterson warns that if the US Federal Reserve delays interest rate cuts in 2025, it could trigger a significant Market downturn, pushing Bitcoin back to around $70,000. Peterson suggests that the lack of rate cuts may be the catalyst for this decline, especially as the Fed’s Chair Jerome Powell expresses a cautious approach to adjusting rates. He predicts Bitcoin may not drop as low as $57,000 due to previous Market behaviors, likening it to a safeguard where investors swoop in at perceived low prices. Historical trends indicate that Bitcoin’s price could stabilize closer to the low $70,000 range, reflecting past patterns from 2022.
Network economist Timothy Peterson has raised concerns about the U.S. Federal Reserve’s potential decision to delay interest rate cuts in 2025. He warns that this could trigger a broader Market downturn, which might push Bitcoin’s price back towards the $70,000 mark. In a post on March 8, Peterson indicated that the absence of immediate rate cuts could be the catalyst needed for such a decline. His remarks followed Federal Reserve Chair Jerome Powell’s statement that there is no rush to adjust interest rates.
Fed Rate Cut Delay May Spark Bear Market
In his speech on March 7, Powell emphasized the Fed’s strategy to wait for more clarity before making any adjustments to interest rates. Peterson suggests that if the Federal Reserve does not lower rates within the year, it could lead to a bear Market—especially for cryptocurrencies like Bitcoin. He has modeled potential Market movements and predicts that Bitcoin could decline by around 33%, dropping from its current price near $86,199 to approximately $57,000.
However, he believes the bottom may hover closer to the low $70,000 range, referencing historical price behaviors. He recalled how in 2022, many predicted Bitcoin would fall to $12,000, but it only dipped to $16,000—a 25% improvement over those expectations. Using this experience, he projects that a similar cushion could exist. If Bitcoin were to decline from $57,000, the 25% low could bring it to around $71,000.
Bitcoin’s 2022 Low Didn’t Drop As Expected
The last time Bitcoin was valued at $71,000 was on November 6, shortly after the 2020 U.S. election when it surged towards $100,000 by December 5. Peterson’s analysis highlights the intricate relationship between Federal Reserve policies and cryptocurrency markets, emphasizing how investor psychology plays a significant role during downturns.
In related news, Arthur Hayes, co-founder of BitMEX, has also suggested a similar potential correction with predictions of Bitcoin’s price falling between $70,000 and $75,000 amid a mini financial crisis, before potentially soaring to $250,000 by the end of the year.
For investors, the current environment demonstrates the volatility of the cryptocurrency Market and the importance of keeping an eye on Federal Reserve policies. Given the interconnectedness of these factors, traders must remain vigilant and adaptive to Market signals before making investment decisions.
Related: Bitcoin Investors Share Mixed Reactions to White House Crypto Summit
FAQ about the Fed Not Cutting Rates in 2025
1. Why might the Fed not cut rates in 2025?
The Fed may not cut rates in 2025 to control inflation. Keeping rates higher can help keep prices stable and encourage savings.
2. What is a bear Market?
A bear Market happens when stock prices fall significantly for a long time, usually by 20% or more. It often signals a slowing economy.
3. How can not cutting rates lead to a bear Market?
If the Fed keeps rates high, borrowing costs increase. This can lead to less spending by businesses and consumers, which can slow down the economy and cause stock prices to drop.
4. What should investors do if they anticipate a bear Market?
Investors may consider diversifying their portfolios, holding onto cash, or shifting to more stable investments. It’s always good to stay informed and make thoughtful decisions.
5. Can the Fed change its mind about rates in 2025?
Yes, the Fed can adjust rates based on new economic data. If the economy improves or inflation decreases, they might decide to cut rates after all.