According to Timothy Peterson, author of Metcalf Law, as a model of Bitcoin value, the crypto industry could be on the brink of another bear market.
This analysis is because the Federal Reserve maintains a cautious attitude towards interest rates despite persistent economic uncertainty.
Analysts explain how the bear market unfolds
In a recent analysis shared on X (Twitter), Peterson warned that the market is currently overvalued. This will make it vulnerable to recessions, he says. Such a drop requires a trigger, but he suggests that the Fed’s decision to stabilize interest rates could be sufficient to hold it back.
“It’s time to talk about the next bear market. There’s no reason to think that it can’t happen now. The rating justifies it. All you need is a trigger. The trigger may be as easy as the Fed won’t cut back at all this year,” Peterson wrote.
Peterson’s analysis draws out similarities between past market slump and current conditions. Using Nasdaq as a reference point, he estimates that the bear market could last from seven to 14 months.
Given that Nasdaq is currently overvalued by 28%, he expected a decline of around 17%, bringing the index down to 15,000.
Performance at NASDAQ price. Source: Peterson of X
Applying these predictions to Bitcoin, Peterson expects a drop of around 33%, pushing the price of Bitcoin down to around $57,000.
“Multiple 1.9. 17% reduction in NASDAQ = 33% reduction in BTC -> $57K,” Peterson added.
However, he points out that opportunistic investors can intervene quickly. Such an intervention would prevent Bitcoin from becoming too low and could find support around $71,000.
This is consistent with a recent analysis from Arthur Hayes. As reported by Beincrypto, the founders of Bitmex claimed that Bitcoin could drop to $70,000 before the potential rebound.
Analysts also highlighted the Bitcoin air gap below $93,198, with little significant support up to the roughly $70,000 range.
The role of the Fed in the market slump
Meanwhile, about a month ago, Fed Chairman Jerome Powell said the central bank was not in a hurry to cut interest rates. He repeated these statements during his speech last week. Speaking at the New York Policy Forum, Powell emphasized the need for patience.
“We don’t have to hurry, we’re in a good position to wait for it to become clearer,” Powell said.
Powell’s remarks come amidst the economic uncertainty driven by President Donald Trump’s policy change in trade, immigration, fiscal policy and regulation. With an inflation rate of around 2.5%, the Fed is focusing on addressing these challenges carefully.
Despite market expectations for interest rate cuts this year, Powell has made it clear that the Fed will wait and see before adjusting monetary policy.
In addition to concerns about an imminent Fed-inspired recession, Bitcoin has recently fallen after the Fed warned about a possible recession. The Fed caused fears of economic instability with a 2.8% drop in GDP in the first quarter of 2025 (first quarter). This had a negative impact on investors’ feelings.
Despite these warnings, Peterson is not convinced that a full-fledged bear market is imminent. He argues that current market conditions are not as euphoric as previous air bubble market conditions. Analysts also explain that bearish sentiment among investors could indicate long-term buying opportunities rather than sales signals.
Beincrypto data shows that Bitcoin was trading at $86,026 at the time of this writing, a 0.1% drop since Sunday’s session was held.
