Economist: Crypto Surge Imminent on Unexpected Fed Rate Cuts

Crypto Market Unprepared for Aggressive Fed Moves, Economist Warns

According to economist Timothy Peterson, crypto market participants are underestimating the potential for aggressive policy shifts by the U.S. Federal Reserve. Peterson suggests the market isn't ready for rapid rate cuts, which could trigger a substantial crypto rally.

“Markets are underpricing the likelihood of rapid rate cuts in the coming months on the part of the Federal Reserve,” Peterson told Cointelegraph. He anticipates a “surprise effect” that will catch the market off guard.

“It will jolt Bitcoin and alts up substantially, and I think that will happen in the next 3-9 months.”

Peterson’s comments follow the Fed's recent 25 basis point rate cut on Sept. 17, a move widely anticipated by the market.

Market Expects Further Rate Cuts

Bitcoin (BTC) saw a brief surge to $117,000 before the rate cut announcement but has since settled back to around $115,570, according to CoinMarketCap.

CME data indicates that market participants expect another 25 basis point rate cut at the Oct. 29 meeting, assigning a 91.9% probability to this scenario.

Fed officials have indicated expectations for two more quarter-point rate cuts this year, though Fed Chair Jerome Powell emphasized that “We’re not on a pre-set path.”

Divergent Views on Fed's September Decision

While some financial institutions anticipated a more aggressive rate cut in September (Standard Chartered had forecast a 50 basis point reduction), Goldman Sachs CEO David Solomon expressed confidence in the Fed’s 25 basis point move.

Lowering interest rates typically benefits risk-on assets like cryptocurrencies, as traditional investments become less attractive.

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