Source: Biteye
Over the past decade, the peaks and troughs of Bitcoin have mirrored the Federal Reserve's interest rate policies.
Peaks often occur when rate hike expectations are strongest.
Troughs are accompanied by a shift in expectations towards rate cuts.
Now, the market stands at a crossroads with three potential paths:
Restarting rate hikes → A second bottom?
Rate cuts in the second half of the year → A surge after fluctuations?
Rate cuts mid-year → Accelerating bull market?
These paths will determine the next direction for Bitcoin.
This article will break down BTC trends under these three scenarios, providing a clear understanding of the macroeconomic and price dynamics at play.
I. Reviewing the Federal Reserve's 10-Year Interest Rate Policy: How Do Bitcoin's "Peaks" and "Troughs" Correspond?
Over the past decade (approximately 2015-2025), the Federal Reserve has gone through a complete cycle of rate hikes, rate cuts, further rate hikes, and pauses. By examining this history, we find intriguing correlations between Bitcoin's price turning points and the Fed's policy milestones, particularly the phenomenon of market expectations "reacting in advance."
To summarize:
Bitcoin peaks often precede the initiation or acceleration of rate hikes, as the market trades on tightening expectations in advance.
Bitcoin troughs typically occur during the latter stages of rate hikes, during pauses in rate hikes, or just before the initiation of a rate cut cycle. The market seeks a bottom when the most pessimistic or accommodative expectations arise.
Quantitative easing (QE) or rapid rate cuts, referred to as "flooding the market," are significant catalysts for bull markets.
The following table contrasts the Federal Reserve's major interest rate policies over the past decade with key Bitcoin price movements:
This table clearly shows the key turning points in Bitcoin's price and the "time lag" of the Federal Reserve's policy cycle. Whether in 2017 or 2021, the peaks of the bull markets occurred just before the "hammer" of rate hikes truly fell or when rate hikes were at their strongest. Conversely, the bottoms of bear markets often coincide with a shift in expectations towards rate cuts.
Currently, we are in a "pause in rate hikes" + "brief rate cut" plateau, with the market waiting for the next clear directional signal—whether there will be another rate cut, entering a phase of quantitative easing and "flooding the market."
II. Interest Rate Projections: Three Scenarios Based on Institutional Predictions
As of now (April 2025), there is a clear divergence in the market regarding the Federal Reserve's next steps. We have synthesized views from several mainstream research institutions to summarize three possible scenarios:
1. Worst Case: Facing Rate Hike Risks in 2025-2026
J.P. Morgan (March report): While predicting rate cuts, they also clearly state that if employment and inflation data are unexpectedly strong, the possibility of discussing rate hikes within the year cannot be ruled out.
LSEG (London Stock Exchange Group, April report): Emphasizes the rising "stagflation risk" and sticky inflation, arguing that there are very compelling reasons to support "extending the policy pause."
Tariff policies and geopolitical factors pose potential upward risks to inflation, which may force the Federal Reserve to maintain a tightening stance, potentially leading to a high-interest rate environment throughout the year, with continued pressure on market liquidity.
2. Base Case: Rate Cuts in the Second Half of the Year, Twice in Total
J.P. Morgan (March report): Predicts that the Federal Reserve will remain patient until June, then cut rates twice, bringing rates down to 3.75%-4.00% by the end of Q3.
EY (Ernst & Young, March report): Expects two rate cuts in 2025, occurring in June and December, each by 25 basis points.
Federal Reserve March meeting: Most officials still expect two rate cuts in 2025, with the annual rate dropping to between 3.75% and 4%.
These views suggest that although inflation is sticky, the overall trend is downward, and the economy and job market will gradually cool. The market will oscillate in anticipation during the first half of the year, with the rate cut cycle commencing in the second half.
3. Best Case: Rate Cuts Mid-Year, Three or More Times in Total
Morningstar (March 28 report): Expects the first rate cut to occur in June, with a total of three cuts in 2025 (75 basis points), bringing the year-end rate down to 3.50%-3.75%.
Plymarket: According to Polymarket data, the most popular scenario is three rate cuts (75 basis points) throughout the year, accounting for about 20%. The next most likely scenarios are four cuts (100 basis points) and five cuts (125 basis points), accounting for 18% and 13.3%, respectively, reflecting a growing market bet on a more aggressive easing path. The previously favored scenario of "only two rate cuts" has now dropped to around 13%. Overall, the market has largely reached a consensus that "there will be at least two rate cuts in 2025," but there remains significant divergence regarding whether a stronger easing cycle will commence, and expectations have yet to be anchored.
These views suggest that if inflation declines faster than expected or if the economy shows clear signs of weakness, the Federal Reserve may implement three or more rate cuts in 2025.
III. Bitcoin Price Projections: How Will Bitcoin's Price Trend Under Three Interest Rate Scenarios?
Based on the three substantiated interest rate scenarios outlined above, we project Bitcoin's price movements going forward:
1. Worst Case (Facing Rate Hike Risks in 2025-2026): Peak Already Seen or Second Bottom, Bear Market Mindset Dominates
Price Projection: If the market confirms the existence of rate hike risks, Bitcoin will likely face selling pressure in Q2 2025 and beyond. The previous high may very well be the final peak of this cycle. Market sentiment will turn pessimistic, potentially leading to a deep correction that tests key support levels below, and a second bottom cannot be ruled out.
Cycle Peak Assessment: It can be basically confirmed that the peak has passed, and 2025 will likely be in a downward continuation or bottom oscillation.
2. Base Case (Rate Cuts in the Second Half of the Year, Twice in Total): Patient Oscillation, Year-End Push Towards Peak Area
Price Projection: During the Q2-Q3 period, while waiting for clear rate cut signals, Bitcoin will likely maintain a wide oscillation at high levels. Market sentiment will fluctuate with data. Once rate cut expectations are confirmed and the first cut is implemented by the end of Q3/Q4, it may trigger the final sprint of the bull market, but this is more likely to be a "last train" rally driven by sentiment and liquidity expectations.
Cycle Peak Assessment: This may occur in Q4 2025 or early 2026, aligning with some predictions from the halving cycle model. It is important to note that when the rate cut news materializes, the market may have already fully priced it in, potentially leading to a "sell the fact" correction. The true price peak may occur when rate cut expectations are at their highest but not yet fully realized.
3. Best Case (Rate Cuts Mid-Year, Three or More Times): Bull Market Accelerates, Peak Arrives Earlier and Possibly Higher
Price Projection: If an unexpected economic downturn forces the Federal Reserve to cut rates earlier, it will significantly boost market risk appetite. Bitcoin is expected to quickly break free from oscillation and launch a strong offensive, driving the entire crypto market into a frenzy.
Cycle Peak Assessment: This may arrive earlier, potentially in Q3 or early Q4 2025. The earlier arrival of liquidity easing may push prices to higher levels, but the overall duration of the cycle will correspondingly shorten.
IV. Conclusion
The Federal Reserve's interest rate decisions remain the anchor for global asset pricing, especially for highly volatile assets like Bitcoin. Although the market is repeatedly joking about the current downturn, based on predictions from major institutions, we are still at a critical juncture of expectation oscillation. While reducing positions, there may still be a glimmer of hope.
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