Bitcoin and Alts Set for Fed ‘Jolt,’ Market Isn’t Ready: Economist

Key Takeaways

• Economist warns of surprise effect: Timothy Peterson expects rapid rate cuts will catch markets off guard.
  
• Bitcoin and alts poised for upside: The Fed’s shift could substantially boost crypto in 3–9 months.
  
• Fed cut in September: 25 bps reduction widely anticipated; markets now see 92% chance of another cut in October.
  
• Institutional divide: Standard Chartered expected 50 bps, Goldman Sachs stuck with 25 bps forecast.
  
• Powell cautious: Fed chair stresses “not on a pre-set path,” keeping traders on edge.
  

Economist Predicts Fed Will Shock Markets

The crypto market may be underestimating just how aggressive the US Federal Reserve will be in shifting its monetary policy, according to economist Timothy Peterson. Speaking to Cointelegraph, Peterson said:

“Markets are underpricing the likelihood of rapid rate cuts in the coming months. There has never been a gradual reduction in rates like that currently envisioned by the Fed.”

He argued that the “surprise effect” could kick in, jolting Bitcoin and altcoins up substantially within the next three to nine months.

Fed’s September Cut Already in Play

On September 17, the Fed delivered its first rate cut of 2025 — a 25 basis point reduction. The move was widely anticipated, with the CME FedWatch Tool showing a 96% probability of a quarter-point cut ahead of the meeting.

Bitcoin briefly spiked to $117,000 hours before the announcement, but quickly pulled back, trading around $115,570 at press time. Over the past 30 days, Bitcoin has climbed just over 1%,

October Meeting in Focus

CME futures data shows traders are now betting heavily on another 25 basis point cut at the Fed’s October 29 meeting. The probability stands at 91.9%, with only an 8.1% chance rate remaining unchanged.

Fed officials themselves project two more cuts before year’s end. Still, Fed Chair Jerome Powell emphasized flexibility, saying: “We’re not on a pre-set path.” That statement has left room for interpretation — and heightened market uncertainty.

Split Views Among Institutions

Financial giants were divided on the September move. Standard Chartered had expected a 50 bps cut, signaling urgency. In contrast, Goldman Sachs CEO David Solomon said he was confident the Fed would stick with a 25 bps step-down.

The divergence reflects broader uncertainty: how aggressively the Fed moves could define risk asset performance, from equities to crypto.

Why It Matters for Crypto

Historically, lower interest rates act as fuel for risk-on assets. When bonds and traditional deposits yield less, investors often turn to stocks, tech, and increasingly cryptocurrencies in search of higher returns.

If Peterson’s forecast of rapid cuts proves accurate, Bitcoin and altcoins could see an unexpected surge. With Bitcoin already trading above $115K and altcoins showing signs of accumulation, the next Fed decisions may be the spark that pushes the crypto market into a new growth phase.