Fed’s Rate Decision in 2025 Could Spark Bear Market, Analyst Warns | 2025
Fed’s Rate Decision in 2025 Could Spark Bear Market, Analyst Warns
Network economist Timothy Peterson has raised concerns about the potential implications of the US Federal Reserve’s monetary policy on the broader market, particularly regarding Bitcoin. According to Peterson’s analysis, if the Fed decides against cutting interest rates in 2025, it could trigger a significant downturn in the market, potentially dragging Bitcoin’s price back toward the $70,000 mark.
Bitcoin’s Potential Bottom and Market Dynamics
Peterson’s model suggests that Bitcoin could reach a low of $57,000 during the next bear market. However, he believes this scenario is unlikely due to the presence of numerous investors who are keenly watching Bitcoin’s movements. He likens these investors to vultures, ready to swoop in when the price drops. In a post on X dated 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 statement comes in the wake of Federal Reserve Chair Jerome Powell’s remarks, where he emphasized that there is no immediate urgency to adjust interest rates. Peterson, who authored the paper “Metcalfe’s Law as a Model for Bitcoin’s Value,” has been using his model to estimate how low the Nasdaq could fall, which in turn helps predict Bitcoin’s potential bottom in the upcoming bear market.
Estimating Market Movements
Utilizing Peterson’s Nasdaq lowest price forward model, he predicts that the Nasdaq could experience a decline of approximately 17% over the next seven months. Applying a multiplier of “1.9” to this decline for Bitcoin, he estimates a potential 33% drop in Bitcoin’s value, which would bring its price down to $57,000 from its current value of $86,199, according to CoinMarketCap data.
Peterson elaborated on the market dynamics, stating, “Traders and opportunists hover over Bitcoin like vultures.” He explained that once the market anticipates Bitcoin reaching $57,000, it may not actually get there due to the presence of investors who believe the price is low enough to buy in. He recalled the market sentiments of 2022 when many predicted Bitcoin’s bottom would be around $12,000, but it only dipped to $16,000, which was 25% higher than expected.
Future Predictions for Bitcoin
Peterson’s analysis leads him to predict a correction in Bitcoin’s price, estimating it could range between $70,000 to $75,000. He describes this potential decline as a “mini financial crisis,” which could coincide with a resumption of money printing by the Federal Reserve. This scenario, he believes, could ultimately propel Bitcoin’s value to an astonishing $250,000 by the end of the year.
As the market continues to react to the Fed’s decisions, the implications for Bitcoin and other cryptocurrencies remain uncertain. Investors are advised to stay informed and consider the potential impacts of monetary policy on their investments.
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