Network economist Timothy Peterson warns that if the U.S. Federal Reserve (Fed) refrains from cutting interest rates in 2025, it could trigger a broader market downturn, potentially dragging Bitcoin down to the $70,000 range.
"What the market needs is a catalyst. I believe that catalyst could be as simple as the Fed deciding not to cut rates at all this year," Peterson wrote in a March 8 X post. His remarks came just a day after Federal Reserve Chair Jerome Powell reiterated his cautious stance, emphasizing that there is no urgency to adjust monetary policy.
Prolonged Tightening Could Spark a Bear Market
"We do not need to be in a hurry and are well-positioned to wait for greater clarity," Powell said in a speech in New York on March 7.
Peterson, the author of “Metcalfe’s Law as a Model for Bitcoin’s Value”, applied his Nasdaq forward price model to estimate Bitcoin’s potential bottom in the next bear market.
According to his model, the Nasdaq could decline by 17% over the next seven months. Applying a 1.9x multiplier for Bitcoin’s price movements relative to the Nasdaq, he estimated a 33% drop for Bitcoin, bringing it down to $57,000 from its publication-time price of $86,199, according to CoinMarketCap data.
However, Peterson believes Bitcoin is unlikely to fall that far, instead expecting a bottom closer to the $70,000 range based on historical market trends from 2022.
"Traders and opportunists circle over Bitcoin like vultures," he noted, explaining that if the market anticipates a $57,000 drop, the price likely won’t reach that level because buyers will step in, considering it “low enough.”
Comparing to the 2022 Market Cycle
"I remember in 2022 when everyone predicted Bitcoin would bottom at $12,000, yet it only dropped to $16,000—25% higher than expected," Peterson recalled. Applying the same 25% deviation to the current projection suggests Bitcoin’s potential bottom could be around $71,000.
The last time Bitcoin traded at this level was on November 6, following Donald Trump’s U.S. election victory. Afterward, the price surged for a month, hitting an all-time high of $100,000 on December 5.
Forecasts from Arthur Hayes and Blockware Solutions
BitMEX co-founder Arthur Hayes shared a similar outlook in January 2025.
"I’m calling for a $70,000 to $75,000 correction in BTC due to a mini financial crisis, followed by a resumption of money printing that will propel us to $250,000 by year-end," Hayes wrote in a January 27 X post.
Meanwhile, in December 2024, crypto mining firm Blockware Solutions projected that Bitcoin’s bear case for 2025 would still be $150,000, assuming the Fed reverses course and begins cutting interest rates.
While opinions vary on Bitcoin’s future price movements, one thing remains clear—the Fed’s monetary policy decisions will play a pivotal role in shaping the crypto market’s trajectory in the months ahead.