Timothy Peterson says rapid rate cuts could spark a major crypto rally within months
The US Federal Reserve’s next policy moves could deliver a powerful boost to Bitcoin and alternative cryptocurrencies, according to economist Timothy Peterson. Speaking on Friday, Peterson argued that investors may be underestimating how aggressively the Fed could cut interest rates in the months ahead.
“Markets are underpricing the likelihood of rapid rate cuts,” Peterson said. “There has never been a gradual reduction in rates like the Fed is projecting. Instead, I expect a surprise effect that will jolt Bitcoin and alts up substantially within 3–9 months.”
Fed’s first cut sparks cautious optimism
On September 17, the Fed delivered its first interest rate cut of 2025, lowering the benchmark rate by 25 basis points. While the move was widely expected, Bitcoin briefly spiked to $117,000 before retracing to around $115,570, according to CoinMarketCap. The asset remains up just over 1% in the past month.
CME FedWatch data shows traders now assign a 91.9% probability of another quarter-point cut at the October 29 meeting, while just 8.1% expect no change.
Despite that consensus, Peterson insists that markets could be “caught off guard” if the Fed accelerates easing. “We’re not on a pre-set path,” Fed Chair Jerome Powell emphasized this week, underscoring the potential for sudden policy shifts.
Institutions divided on Fed strategy
Wall Street firms were split ahead of the September decision. Standard Chartered projected a more aggressive 50 bps cut, while Goldman Sachs expected the Fed to proceed with the smaller adjustment that ultimately materialized.
Lower borrowing costs are traditionally bullish for risk-on assets, as they make safe-haven investments like government bonds less attractive. This dynamic has historically supported capital inflows into cryptocurrencies, equities, and emerging markets.
Peterson believes that once the Fed accelerates its easing cycle, digital assets could be among the biggest beneficiaries. “The market isn’t ready for the scale of policy reversal that’s coming,” he said.
With at least two more rate cuts projected this year, traders are bracing for a period of heightened volatility — and potentially a breakout rally in Bitcoin and altcoins.
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This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.