Macroeconomic Policy and Bitcoin Price Movement: A Ten-Year Review and Future Outlook

Over the past decade, the price movement of Bitcoin has shown a close correlation with the Federal Reserve's interest rate policy. Generally, the peaks of Bitcoin's bull markets tend to occur when expectations for interest rate hikes are strongest, while the bottoms of bear markets are often accompanied by expectations for interest rate cuts.

Currently, the market is facing three possible development paths:

1. Restarting interest rate hikes - may lead to a second bottom
2. Starting to cut interest rates in the second half of the year - may trigger fluctuations before breaking new highs
3. Mid-year interest rate cuts - may accelerate the bull market process

These different paths will largely determine the future price movement of Bitcoin.

1. Review of the Federal Reserve's Ten-Year Interest Rate Policy Cycle and Bitcoin Price Movement

In the past decade (approximately 2015-2025), the Federal Reserve has gone through a complete cycle of interest rate hikes, cuts, subsequent hikes, and pauses. By reviewing this history, we find a significant correlation between the turning points in Bitcoin prices and the policy nodes of the Federal Reserve, particularly in the market's expected reactions to policy changes.

The main observations are as follows:

1. The peak of Bitcoin's bull market usually precedes the initiation or acceleration of actual interest rate hikes, reflecting the market's preemptive response to tightening policies.

2. The bottom of the Bitcoin bear market often appears in the later stages of interest rate hikes, during the pause in rate hikes, or just before a rate cut cycle begins. The market tends to look for a bottom when the most pessimistic or accommodative expectations arise.

3. Quantitative easing (QE) or drastic interest rate cuts, also known as "big water" policies, are important factors driving the bull market.

Currently, we are in a "pause on interest rate hikes" and "temporary rate cut" platform period, and the market is waiting for the next clear directional signal - whether there will be another rate cut, entering a new round of quantitative easing.

II. Three Interest Rate Scenarios Based on Institutional Forecasts

As of April 2025, there is a clear divide in the market regarding the Federal Reserve's next move. Based on the views of several mainstream research institutions, we can summarize three possible scenarios:

1. Worst case scenario: facing interest rate hike risks in 2025-2026

Some institutions warn that if employment and inflation data is unexpectedly strong, the possibility of discussing interest rate hikes within the year cannot be ruled out. Factors such as tariff policies and geopolitics may trigger upside inflation risks, forcing the Federal Reserve to maintain tight policies, resulting in a prolonged high interest rate environment and pressuring market liquidity.

2. Benchmark Situation: Interest rate cuts will begin in the second half of the year, with a total of 2 rate cuts for the year.

Most institutions expect the Federal Reserve to maintain a wait-and-see attitude before June, and then cut interest rates twice in the second half of the year, bringing the rates down to the range of 3.75%-4.00% by the end of the third quarter. This view holds that despite some stickiness in inflation, the overall trend is downward, and the economy and job market will gradually cool down.

3. Best case scenario: start cutting interest rates mid-year, with 3 or more rate cuts throughout the year.

Some more optimistic predictions suggest that if inflation decreases faster than expected or the economy shows significant weakness, the Federal Reserve may implement three or more rate cuts in 2025. Some market participants are even betting on a possible 4-5 rate cuts throughout the year.

3. Bitcoin price movement simulation under three interest rate scenarios

Based on the three interest rate scenarios mentioned above, we can make the following projections for the future price movement of Bitcoin:

1. Worst-case scenario (facing interest rate hike risk):

If the market confirms the risk of interest rate hikes, Bitcoin may face significant selling pressure in the second quarter of 2025 and beyond. Previous highs may become the final peak of this cycle. Market sentiment may turn pessimistic, and a deep correction or even a second bottom cannot be ruled out. In this case, 2025 is highly likely to be in a downward continuation or bottom consolidation phase.

2. Baseline Scenario (Interest rate cut in the second half of the year, 2 times in total):

During the second and third quarters, while waiting for clear signals of interest rate cuts, Bitcoin may maintain a high-level wide fluctuation. Once the expectation of interest rate cuts is confirmed and the first cut is implemented at the end of the third quarter or in the fourth quarter, it may trigger the final surge of the bull market. The peak of the cycle may occur in the fourth quarter of 2025 or early 2026, which aligns with the predictions of some halving cycle models.

3. Best case scenario (interest rate cuts in the middle of the year, 3 times or more throughout the year):

If an unexpected economic slowdown forces the Federal Reserve to cut interest rates earlier, it will greatly boost market risk appetite. Bitcoin is expected to quickly break free from fluctuations and launch a strong offensive, driving the entire crypto market into a frenzy. The peak of the cycle may be advanced to the third quarter or early fourth quarter of 2025. An earlier arrival of liquidity easing may push prices to higher levels, but the duration of the entire cycle may correspondingly shorten.

Conclusion

The Federal Reserve's interest rate decisions remain a crucial anchor for global asset pricing, significantly impacting highly volatile assets like Bitcoin. Although current market sentiment fluctuates, according to predictions from major mainstream institutions, we are still at a critical juncture of expectations swinging. As investors adjust their positions, they should also maintain a moderately optimistic attitude, closely monitor economic data and policy trends, and prepare for various possible scenarios.