Economist Timothy Peterson Warns US Rate Cuts Delay Could Trigger Market Downturn

Economist Timothy Peterson has warned that a delay in interest rate cuts by the U.S. Federal Reserve in 2025 could lead to a broader market downturn, potentially dragging Bitcoin’s price back toward $70,000.

In a March 8 post on X, Peterson suggested that the lack of rate cuts could serve as a trigger for market weakness.

“What it needs is a trigger. I think that trigger may be as simple as the Fed not cutting rates at all this year,” he wrote.

Powell Signals No Rush for Rate Cuts, Keeping Markets on Edge

His comments follow Federal Reserve Chair Jerome Powell’s statement on March 7, where Powell reiterated that the central bank is in no rush to lower interest rates.

“We do not need to be in a hurry and are well-positioned to wait for greater clarity,” Powell said during a speech in New York.

Peterson, known for his work on Bitcoin’s valuation using Metcalfe’s Law, has analyzed potential market declines by estimating how low the Nasdaq might fall in a bear market.

His model suggests that the Nasdaq could drop by 17% over approximately seven months before stabilizing.

Bear Market Analysis
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It's time to talk about the next bear market.

There's no reason to think it couldn't happen now. The valuation justifies it. What it needs is a trigger. I think that trigger may be as simple as the Fed not cutting rates at all this year. Powell said… pic.twitter.com/qqtsRdG0b4

— Timothy Peterson (@nsquaredvalue) March 8, 2025

Applying a historical multiplier of 1.9 to Bitcoin’s movements relative to the Nasdaq, Peterson projected a 33% decline in Bitcoin’s price, bringing it down to $57,000 from its March 8 price of $86,199, according to CoinMarketCap data.

However, he noted that Bitcoin might not fall that far, instead expecting a bottom in the low $70,000 range.

He referenced 2022’s market conditions, where Bitcoin’s decline was less severe than many anticipated.

“I remember in 2022 when everyone said the bottom would be $12K. It only went to $16K, 25% higher than expected,” Peterson said.

Applying a similar margin of error, he estimated Bitcoin’s potential floor price at around $71,000.

Bitcoin Surged Past $100K After Trump’s 2024 Election Victory

Bitcoin last traded near $71,000 on Nov. 6, 2024, following Donald Trump’s election victory. Afterward, it surged past $100,000 by Dec. 5.

Peterson’s outlook aligns with that of BitMEX co-founder Arthur Hayes, who predicted a correction in Bitcoin to between $70,000 and $75,000.

Hayes believes a financial downturn could prompt renewed money printing, pushing Bitcoin’s price to $250,000 by the end of 2025.

Meanwhile, in December 2024, crypto mining firm Blockware Solutions projected a “bear case” scenario where Bitcoin reaches $150,000 if the Fed reverses course on interest rate cuts.

As reported, Bitcoin has long been hailed as a potential hedge against geopolitical and fiscal instability, often compared to gold as a store of value.

However, despite its decentralized nature and limited supply, Bitcoin continues to trade like a risk asset, moving in tandem with equities rather than diverging as a safe haven, according to Garrison Yang, co-founder of Web3 development studio Mirai Labs.

In a recent interview with Cryptonews.com, Yang argued that Bitcoin’s correlation with traditional financial markets remains strong, posing challenges to its hedge narrative.