Thomas Daniels
The U.S. Federal Reserve’s potential reluctance to cut interest rates in 2025 may ignite a broader market downturn, according to network economist Timothy Peterson. His analysis suggests that such a scenario could lead to a sharp correction in Bitcoin’s price, potentially pushing it toward the $70,000 range.
Bitcoin’s Bear Market Outlook
Peterson, the author of Metcalfe’s Law as a Model for Bitcoin’s Value, outlined his concerns in a March 8 post on X. He emphasized that while Bitcoin could theoretically drop to $57,000, it is unlikely to reach that level due to strong investor demand.
“What it needs is a trigger. I think that trigger may be as simple as the Fed not cutting rates at all this year,” Peterson stated. His warning comes just after Federal Reserve Chair Jerome Powell reiterated that there is no urgency to adjust interest rates, stating on March 7 that “we do not need to be in a hurry and are well-positioned to wait for greater clarity.”
Peterson’s Nasdaq-based forward model predicts that in a bear market, the index would decline by 17% over roughly seven months before finding a bottom. Applying a multiplier of 1.9 to Bitcoin’s movement, he estimates a potential 33% drop in Bitcoin’s price, bringing it to approximately $57,000 from its current level of $86,199, as per CoinMarketCap data.
Why Bitcoin May Avoid a Deep Correction
Despite the model’s projection, Peterson believes Bitcoin is unlikely to fall that low. He expects a floor closer to the low $70,000 range, citing historical trends. “Traders and opportunists hover over Bitcoin like vultures,” he noted, explaining that as soon as the market anticipates a steep decline, investors typically step in to buy at perceived bargain prices.
Peterson drew parallels to Bitcoin’s 2022 downturn when many expected the price to hit $12,000, but it only dropped to $16,000—a 25% difference. Applying the same margin to his $57,000 estimate, he suggests Bitcoin’s bottom could instead be around $71,000.
Market Experts Weigh In
Peterson’s outlook aligns with other market analysts. BitMEX co-founder Arthur Hayes forecasted in January 2025 that Bitcoin could correct to between $70,000 and $75,000 due to a “mini financial crisis” before resuming its climb to $250,000 by year-end.
Similarly, in December 2024, crypto mining firm Blockware Solutions projected that Bitcoin’s bear case for 2025 could still see prices reach $150,000, assuming the Federal Reserve reverses course on monetary policy.
While the Fed’s rate decisions remain uncertain, analysts suggest that Bitcoin’s trajectory will be closely tied to macroeconomic trends and investor sentiment.
