Bitcoin Could Explode Beyond $200,000: It All Depends on the Fed’s Next Move
Financial analysts are coming up with a bold scenario: Bitcoin could break the $200,000 mark – but only if the Federal Reserve is forced to deliver a massive rate cut.
If former President Donald Trump’s proposal for a 300 basis point cut becomes a reality, the cryptocurrency market could see an unprecedented rally, according to Kobeissi Letter. But the path to this scenario is not straightforward – it would have to go through a risky US sovereign debt market.
US bonds send out a warning signal
Although the Fed is expected to start cutting interest rates in September 2025, the bond market has reacted in the opposite direction. The yield on the 30-year Treasury bond has returned to 5% – its highest level since the 2008 crisis.
This reflects the fact that investors do not have full confidence in the Fed's easing policy, especially when the US has to issue more than $200 billion in bonds in just 5 weeks. Buyers demand a higher "risk premium", while core inflation remains anchored above 3%.
If this trend continues, the USD could lose another 25% of its purchasing power over the next decade – extending the weakness that began in 2020.
The risk of "stagflation"
The US economy is in a difficult position:
Youth unemployment (16-24 years old) has increased to 10%.
Gold prices have risen steadily, reflecting investors' defensive sentiment.
Deficit spending has escalated, while borrowing costs have become more expensive.
This is a classic sign of stagflation – the economy is stagnant but prices are still rising. In this context, the traditional tools of central banks are almost useless.
Lessons from the UK and Japan
The situation of “rate cuts but markets ignore” is not only happening in the US:
UK: cut interest rates five times in 12 months, but the 30-year bond yield still rose to 5.7%, the highest since 1998.
Japan: 30-year government bond yield exceeds 3.2%, despite easing.
The common thread: bond markets do not trust central banks when public debt is swelling and inflation is eroding purchasing power.
Why Bitcoin is a “safe ticket”
When traditional debt markets start to falter, global investors often look for assets that are not dependent on governments. With its limited supply and decentralized nature, Bitcoin has emerged as a hedge against both inflation and sovereign debt crises.
If the Fed is forced to cut interest rates sharply to save the economy, capital could flow out of Treasury bonds and into cryptocurrencies. In that scenario, Bitcoin surpassing $200,000 is no longer a far-fetched prospect, but rather a natural destination for global capital flows.