Network economist Timothy Peterson warns the Federal Reserve’s potential refusal to cut rates in 2025 may trigger a crypto downturn. His model predicts Bitcoin could plunge 33% to $57,000 if a bear market strikes. However, he argues investor demand might prevent such a drop, noting, “Traders hover over Bitcoin like vultures.
Bitcoin’s Potential Floor: $57K or $70K?
Peterson’s analysis ties Bitcoin’s bottom to Nasdaq performance, forecasting a 17% drop for the index over seven months. Applying a 1.9x multiplier, Bitcoin could sink to $57,000. Yet historical trends suggest a milder floor near $70,000, mirroring 2022’s resilience. “Prices won’t crater if buyers step in early,” he explained.
2022’s Unmet Crash Predictions Offer Clues for 2025
In 2022, Bitcoin’s low hit $16,000, which is 25% above the feared $12,000. Peterson highlights this pattern, suggesting a $57,000 prediction might overshoot reality. A similar 25% buffer today would place Bitcoin’s floor at $71,000. Notably, Bitcoin last touched $71,000 in November 2024 post-election before surging to $100,000.
Bitcoin Reserve Backlash Highlights Unrealistic Expectation
The U.S. Strategic Bitcoin Reserve, fuelled by seized assets, triggered a 6% price drop due to avoiding direct purchases. Regulatory expert Anastasija Plotnikova called reactions “bizarre,” noting federal crypto support was once “revolutionary.” Meanwhile, analysts warn short-term disappointment and tariff concerns could push Bitcoin below $82,000.
White House Crypto Summit Marks Policy Pivot
Following the reserve announcement, Trump hosted a landmark Crypto Summit, signalling a shift from Biden’s approach. Ethereum Name Service’s Alexander Urbelis called it a “dramatic shift,” appealing to younger voters. While outcomes remain unclear, the event underscores growing political engagement with blockchain.
Global Dynamics May Offset Fed’s Impact on Crypto
High U.S. rates could strengthen the dollar, pressuring Bitcoin’s value. On the other hand, looser policies abroad might funnel capital into crypto. BitMEX’s Arthur Hayes predicts a 2025 correction to $70K before a $250K rally, citing renewed money printing. Meanwhile, institutional adoption and ETFs may counterbalance macro risks.
Conclusion: Innovation Could Outweigh Macro Pressures
While Fed decisions loom large, crypto’s trajectory hinges on global adoption and tech advances. As Peterson notes, investor behaviour often defies models, creating unexpected floors. With regulatory shifts and institutional interest accelerating, crypto’s 2025 story may blend volatility with breakthroughs proving its resilience yet again.
