Original source: Biteye
Over the past decade, Bitcoin’s bull peaks and bear bottoms have been a reflection of the Federal Reserve’s interest rate policy.
The top often occurs when expectations of a rate hike are strongest
The bottom is accompanied by expectations of a rate cut
Now, the market is at a fork in three paths:
Restart of interest rate hikes → Second bottom?
Interest rate cut in the second half of the year → Peak after volatility?
Mid-year interest rate cut → Bull market acceleration?
These paths determine the next step for Bitcoin.
This article will analyze the BTC trend under three scenarios to understand the game logic of macro + price at one time.
1. Review of the Federal Reserve’s 10-year interest rate policy: how do Bitcoin’s “top” and “bottom” correspond?
In the past decade (approximately 2015-2025), the Federal Reserve has gone through a complete cycle of interest rate hikes, interest rate cuts, interest rate hikes, and then pauses. After reviewing this history, we found that there is an interesting correlation between the turning points of Bitcoin prices and the policy nodes of the Federal Reserve, especially the phenomenon of early reaction of market expectations.
Let me first state the conclusion:
1. Bitcoin bull peaks often precede the start or acceleration of interest rate hikes, and the market trades in tightening expectations in advance.
2. Bitcoin bear bottoms usually occur at the end of a rate hike, during a pause in rate hikes, or before a rate cut cycle begins. The market looks for a bottom when the most pessimistic or easing expectations emerge.
3. Massive money printing such as quantitative easing (QE) or rapid interest rate cuts is an important catalyst for the bull market.
The following is a comparison table of the Federal Reserve’s main interest rate policies and key trends of Bitcoin in the past decade:
This table clearly shows the time difference between the key turning points of Bitcoin prices and the Feds policy cycle. Both the peaks of the bull market in 2017 and 2021 occurred before the hammer of interest rate hikes actually fell or before the rate hikes were the strongest. The bottom of the bear market is often accompanied by expectations of a shift to interest rate cuts.
We are currently in a platform period of pause of interest rate hikes + temporary interest rate cuts, and the market is waiting for the next clear direction signal - whether interest rates can be cut again and enter the stage of quantitative easing massive flooding.
2. Interest rate deduction: three scenarios based on institutional forecasts
Currently (April 2025), the market is divided over the next move of the Federal Reserve. We have summarized three possible scenarios based on the views of many mainstream research institutions recently:
1. Worst Case: Risk of interest rate hikes in 2025-2026
JP Morgan (JPMorgan Chase, early March report): Although it predicts a rate cut, it also clearly points out that if employment and inflation data are unexpectedly strong, the possibility of discussing a rate hike this year is not ruled out.
LSEG (London Stock Exchange Group, early April report): Emphasizing the rising stagflation risks and inflation stickiness, it believes that there are very strong reasons to support extending the policy suspension period.
Tariff policies and potential upside risks to inflation from geopolitics may force the Federal Reserve to maintain tightening, which may lead to a high interest rate environment throughout the year and continued pressure on market liquidity.
2. Base Case: Rate cuts will be initiated in the second half of the year, twice a year
JP Morgan (JPMorgan Chase, early March report opinion): The Federal Reserve is expected to remain patient until June, and then cut interest rates twice, bringing the interest rate to 3.75%-4.00% by the end of Q3.
EY (Ernst Young, March report opinion): It is expected that there will be two interest rate cuts in 2025, in June and December respectively, with a cut of 25 basis points.
Federal Reserve March meeting: Most officials still expect two rate cuts in 2025, with annual interest rates falling to 3.75% to 4%.
These views believe that although inflation is sticky, the overall trend is downward, and the economy and job market will gradually cool down. The market fluctuated in the first half of the year, and the interest rate cut cycle began in the second half of the year.
3. Best Case: Rate cuts are initiated in the middle of the year, 3 or more times a year
Morningstar (March 28 report opinion): It is expected that the first interest rate cut may be in June, and there will be three interest rate cuts (75 basis points) in 2025, with the interest rate falling to 3.50%-3.75% by the end of the year.
Plymarket: According to Polymarket data, the scenario most people bet on is three rate cuts (75 basis points) throughout the year, accounting for about 20%. The second largest scenario is four rate cuts (100 basis points) and five rate cuts (125 basis points), accounting for 18% and 13.3% respectively, reflecting that some markets are heating up bets on aggressive easing paths. The only two rate cuts scenario, which was the most optimistic at the beginning of the year, has now fallen back to around 13%. Overall, the market has basically reached a consensus that there will be at least two rate cuts in 2025, but there are still large differences on whether it will enter a more aggressive water release cycle, and expectations have not yet been anchored.
These views suggest that the Fed could implement three or more rate cuts through 2025 if inflation falls faster than expected or the economy weakens significantly.
3. Bitcoin price deduction: How will the price of Bitcoin trend under three interest rate scenarios?
Based on the three well-documented interest rate scenarios above, we deduce the next price trend of Bitcoin:
1. Worst Case (Risk of interest rate hikes in 2025-2026): The top has been reached or the second bottom has been reached, and bear market thinking dominates
Trend deduction: If the market confirms the risk of interest rate hikes, Bitcoin will most likely be under selling pressure in Q2 2025 and beyond. The previous high point may be the final peak of this cycle. Market sentiment will turn pessimistic, and a deep correction may occur, testing the key support below, and even the possibility of a second bottoming out cannot be ruled out.
Judgment of the cycle peak: It can be basically confirmed that the peak has passed, and there is a high probability that it will be in a downward relay or bottom oscillation in 2025.
2. Base Case (rate cuts will be launched in the second half of the year, twice a year): Be patient and oscillate, and hit the peak area at the end of the year
Trend deduction: During the period of Q2-Q3 when waiting for the clear signal of interest rate cut, Bitcoin is likely to maintain a high level and fluctuate widely. Market sentiment will fluctuate with the data. Once the interest rate cut expectation is confirmed at the end of Q3/Q4 and the first interest rate cut is implemented, it may trigger the last sprint of the bull market, but this is more likely to be a last train market driven by sentiment and liquidity expectations.
Cycle peak judgment: It may be in Q4 2025 or early 2026, which is consistent with some predictions of the halving cycle model. It should be noted that when the interest rate cut news is realized, the market may have fully priced in, and even a sell the fact callback may occur. The real price peak may be when the expectation of interest rate cut is the strongest but has not been fully implemented.
3. Best Case (rate cuts initiated in the middle of the year, 3 or more times a year): The bull market accelerates, the peak is advanced and may be higher
Trend deduction: If the unexpected economic weakness forces the Federal Reserve to cut interest rates ahead of schedule, it will greatly boost market risk appetite. Bitcoin is expected to quickly get rid of the shock and launch a strong offensive, driving the entire crypto market into a frenzy.
Cycle peak judgment: It may be brought forward to Q3 or early Q4 of 2025. Earlier liquidity easing may help push prices to higher levels, but the duration of the entire cycle will be shortened accordingly.
IV. Conclusion
The Fed’s interest rate decision is still the anchor of global asset pricing, especially for highly volatile assets like Bitcoin. Although the market is repeatedly teasing that it has fallen, according to the forecasts of major mainstream institutions, it is still at a critical node of expected swings. While reducing positions, perhaps there is a glimmer of hope.
