Reviewing the Fed’s 10-year interest rate cycle: Where will Bitcoin go?

In the past decade, the bull and bear bottoms of Bitcoin are a reflection of the Fed's interest rate policy.

• The top often occurs when the expectation of interest rate hike is the strongest

• The bottom is accompanied by the expectation of interest rate cut

Now, the market is at the fork of three paths:

• Restart of interest rate hike → second bottoming?

• Interest rate cut in the second half of the year → peak after shock?

• Interest rate cut in the middle of the year → acceleration of the bull market?

These paths determine how Bitcoin will go in the next section.

This article will dismantle the BTC trend under three scenarios and understand the game logic of macro + price at one time.

1. Review of the Fed's 10-year interest rate policy, how does Bitcoin's "top" and "bottom" respond?

In the past ten years (approximately 2015-2025), the Fed has experienced a complete cycle of raising interest rates, lowering interest rates, raising interest rates again, and then pausing. Combing through this history, we found that there is an interesting connection between the turning point of Bitcoin prices and the Fed's policy nodes, especially the "early reaction" phenomenon of market expectations.

Conclusion first:

1. Bitcoin bull peaks often precede the start or acceleration of interest rate hikes, and the market trades tightening expectations in advance.

2. Bitcoin bear bottoms usually appear in the later stages of interest rate hikes, during the pause in interest rate hikes, or before the start of the interest rate cut cycle. The market looks for the bottom when the most pessimistic or easing expectations appear.

3. "Big money releases" such as quantitative easing (QE) or extremely rapid interest rate cuts are important catalysts for the bull market.

The following is a comparison table of the major interest rate policies of the Federal Reserve and the 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 Fed's policy cycle. Both the peaks of the bull market in 2017 and 2021 occurred before the "hammer" of the interest rate hike actually fell or the interest rate hike was the strongest. The bottom of the bear market is often accompanied by expectations of a shift to interest rate cuts.

Currently, we are in a platform period of "pausing interest rate hikes" + "short-term interest rate cuts". The market is waiting for the next clear direction signal-whether interest rates can be cut again and enter the "large-scale water release" stage of quantitative easing.

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 in recent times:

1. Worst Case: Risk of interest rate hikes in 2025-2026

• J.P. 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 interest rate hikes within the year is not ruled out.

• LSEG (London Stock Exchange Group, early April report): Emphasizing the rising "stagflation risk" and inflation stickiness, it believes that there are very sufficient reasons to support "extending the policy suspension period."

Tariff policies and geopolitical potential upside risks to inflation may force the Fed 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 throughout the year

• J.P. Morgan (JPMorgan Chase, early March report): The Fed is expected to remain patient until June, and then cut interest rates twice, to 3.75%-4.00% by the end of Q3.

• EY (EY, March report): It is expected that there will be two rate cuts in 2025, in June and December, with a rate cut of 25 basis points.

• Federal Reserve March meeting: Most officials still expect 2 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 rate cut cycle began in the second half of the year.

3. Best Case: Start rate cuts in the middle of the year, 3 times or more throughout the year

• Morningstar (March 28 report view): It is expected that the first rate cut may be in June, and there will be 3 rate cuts (75 basis points) in 2025, and the interest rate will fall to 3.50%-3.75% by the end of the year.

• Plymarket: According to Polymarket data, the most popular scenario is three rate cuts (75 basis points) throughout the year, accounting for about 20%. The second most popular 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 betting 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 on "at least two rate cuts in 2025", but there are still large differences on whether it will enter a more powerful water release cycle, and expectations have not yet been anchored.

These views believe that if inflation falls faster than expected or the economy is significantly weak, the Fed may implement three or more rate cuts in 2025.

3. Bitcoin price deduction: How will the price trend of Bitcoin be under the three interest rate scenarios?

Based on the above three well-documented interest rate scenarios, we deduce the next price trend of Bitcoin:

1. Worst Case (Facing the risk of interest rate hikes in 2025-2026): The top has appeared or the second bottom has been tested, and the bear market thinking is dominant

Trend deduction: If the market confirms that there is a risk of interest rate hikes, Bitcoin will most likely be under selling pressure in Q2 2025 and later. The previous high point may be the final peak of this cycle. Market sentiment will turn pessimistic, and there may be a deep correction, testing the key support below, and even the possibility of a second bottom is not ruled out.

Cycle peak judgment: It can be basically confirmed that the peak has passed, and there is a high probability that it will be in the middle of a decline or bottom shock in 2025.

2. Base Case (rate cuts will be initiated in the second half of the year, 2 times throughout the year): Be patient and oscillate, and hit the apex area at the end of the year

Trend deduction: During the period of Q2-Q3 when waiting for the clear signal of rate cuts, Bitcoin is likely to maintain a high level of wide fluctuations. Market sentiment will fluctuate with the data. Once the rate cut expectations are confirmed at the end of Q3/Q4 and the first 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 apex 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 rate cut news is realized, the market may have been fully priced, and even a "sell fact" callback may occur. The real price top may be when the rate cut expectations are the strongest but have not been fully implemented.

3. Best Case (rate cuts initiated in the middle of the year, 3 or more times throughout the year): The bull market accelerates, the peak is advanced and may be higher

Trend deduction: If the unexpected weakening of the economy forces the Fed to cut interest rates in advance, it will greatly boost market risk appetite. Bitcoin is expected to quickly get rid of shocks, launch a strong offensive, and drive the entire crypto market into a frenzy.

Cycle peak judgment: It may be advanced to Q3 or early Q4 in 2025. Earlier liquidity easing may help push prices to higher levels, but the duration of the entire cycle will be shortened accordingly.

Fourth, Summary

The Fed's interest rate decision is still the anchor for global asset pricing, especially for highly volatile assets such as Bitcoin. Although the market is repeatedly teasing that it has fallen, according to the predictions of major mainstream institutions, it is still at a critical node where expectations are swinging. While reducing your position, you may be able to retain a glimmer of hope.