Fed's Rate Stance: Bear Market Trigger for Bitcoin?
Fed Rate Hikes Could Trigger Bitcoin Bear Market
Network economist Timothy Peterson forecasts a potential Bitcoin price crash to $70,000 if the Federal Reserve refrains from cutting interest rates in 2025. This prediction follows Federal Reserve Chair Jerome Powell's recent statement emphasizing a cautious approach to rate adjustments. Powell stated, "We do not need to be in a hurry and are well-positioned to wait for greater clarity."
Peterson's Bear Market Prediction
Peterson, known for his work on "Metcalfe’s Law as a Model for Bitcoin’s Value," correlated a potential Nasdaq drop with Bitcoin's price movement. His model suggests a 17% drop in the Nasdaq, translating to a 33% Bitcoin decline, potentially pushing the price down to $57,000 from its current level (at the time of publication, approximately $86,199 according to CoinMarketCap). However, Peterson anticipates a less severe drop, closer to $70,000, due to market dynamics and investor behavior.
He notes that historical trends, like the 2022 bear market, show that the bottom often lands higher than initially predicted. He cites the example where a predicted $12,000 bottom for Bitcoin instead settled around $16,000 in 2022.
Other Experts' Opinions
Peterson's prediction aligns with other experts' concerns. In January 2025, Arthur Hayes, BitMEX co-founder, forecasted a Bitcoin correction to the $70,000-$75,000 range. Conversely, Blockware Solutions offered a more bearish outlook in December 2024, predicting a Bitcoin price of $150,000 if the Fed reverses its rate cut plans.
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