“Crypto Set for a Boom as Fed Actions Catch Markets Off Guard, Says Economist”

Participants in the crypto market might be undervaluing how assertive the US Federal Reserve will be in adjusting its policy trajectory, an economist suggests.

“Markets are undervaluing the chances of swift rate reductions in the upcoming months from the Federal Reserve,” economist Timothy Peterson informed Cointelegraph on Friday.

“There has never been a slow decline in rates like what is currently anticipated by the Fed,” Peterson remarked, indicating that he foresees “the surprise effect” to emerge, which could possibly catch the market off guard.

“It will significantly elevate Bitcoin and altcoins, and I believe this will occur within the next 3-9 months.”

Peterson’s remarks follow closely after the Fed executed its initial rate cut of 2025 on September 17 by 25 basis points. The rate reduction was broadly expected, as the CME FedWatch Tool indicated a 96% likelihood of a quarter-point decrease and merely a 4% possibility of a 50-point cut in the hours prior to the announcement.

Market is predicting another rate decrease in October

Bitcoin (BTC) briefly jumped to $117,000 hours before the Fed’s announcement regarding the rate cut but has since pulled back to levels seen in the preceding days, trading at $115,570 at the time of writing, as per CoinMarketCap.

CME data reveals that market participants are factoring in a 91.9% likelihood of another 25 basis point rate reduction at the meeting on Oct. 29, with just an 8.1% chance that rates will remain the same.

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Fed officials indicated they anticipate two additional quarter-point reductions this year. However, Fed Chair Jerome Powell stated, “We’re not on a predefined course.”

Financial institutions were divided on Fed’s September decision

Several financial institutions expected a more forceful rate cut during the September meeting, with Standard Chartered predicting a 50 basis point reduction.

Goldman Sachs CEO David Solomon, on the other hand, was more assured that the Fed would maintain a 25 basis point cut.

Reducing interest rates generally serves as a bullish signal for riskier assets, such as cryptocurrencies, since conventional investments like bonds and term deposits become less appealing to investors.

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