Bitcoin’s meteoric rise to $100,000 in December 2024 has hit a wall, with analyst Timothy Peterson warning of a looming bear market that could slash its value by 33% to $57,000 in 2025. In a March 8, 2025, X post, the network economist and author of “Metcalfe’s Law as a Model for Bitcoin’s Value” pointed to the Federal Reserve’s cautious monetary policy as a potential catalyst for the downturn. The Fed’s stance, coupled with fading catalysts like Trump’s Strategic Bitcoin Reserve, has reignited fears of a prolonged crypto winter.
Peterson’s analysis hinges on market overvaluation. “It’s time to talk about the next bear market. 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,” he wrote. With Fed Chair Jerome Powell signaling no rush to adjust rates in a March 7 New York speech—“We’re well-positioned to wait for greater clarity”—the central bank’s hawkish outlook has spooked investors. Mitrade.com notes the Fed’s projection of a 2.8% GDP decline in Q1 2025, stoking recession fears that could drag risk assets like Bitcoin lower.
The warning isn’t isolated. Bitcoin’s recent break below its Ascending Broadening Wedge, a bullish pattern, suggests technical weakness. Peterson models a potential 17% Nasdaq drop over seven months, estimating Bitcoin could bottom at $57,000—though he doubts it’ll hit that low, citing “vulture” investors stepping in around $71,000, a 25% buffer seen in 2022’s $16,000 floor versus a $12,000 prediction. “Traders hover over Bitcoin like vultures—once it’s ‘low enough,’ they buy,” hinting at resilience despite bearish signals.
Context matters. Bitcoin’s rally—up from $71,000 post-Trump’s November 2024 win to $100,000 by December 5—leaned on pro-crypto tailwinds, including Trump’s March 6 order halting sales of $17 billion in seized BTC for a Strategic Reserve. Yet, with no concrete Reserve developments and Powell’s rate stance souring sentiment, momentum has stalled.
Peterson remains nuanced. Unlike past bubbles—2017’s $20,000 peak or 2021’s $69,000—he argues current euphoria is tame. Bearish sentiment might even signal a buying opportunity, not a sell-off, though a 7-14 month downturn looms if triggered. “It’s not imminent, but conditions align,” he said, contrasting Blockware Solutions’ December 2024 $150,000 “bear case” if rates ease. BitMEX’s Arthur Hayes, in January 2025, also foresaw a $70,000-$75,000 dip before a $250,000 rebound if the Fed pivots to stimulus.
For Web3, the stakes are high. Bitcoin’s $1.84 trillion market cap anchors crypto, but a Fed-induced bear market could ripple across altcoins. Investors face a dilemma—hodl through a potential $57,000 bottom or buy the dip at $71,000, as Peterson’s vulture theory suggests. The Fed’s next moves, expected post its March meeting, will be pivotal—rate cuts could reignite risk appetite; stasis might cement the downturn.
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