Consumer Market Weakness May Trigger Fed Rate Cuts and Historic Cryptocurrency Growth

Jack Dorsey, Twitter founder and CEO of Block, warned investors on Tuesday about a significant decline in discretionary consumer spending. This statement, which caused a 20% drop in his company’s shares, could paradoxically become a catalyst for unprecedented Bitcoin price growth. Experts indicate that consumer market weakness may force the Federal Reserve to lower interest rates, which historically correlates with bull cycles in the cryptocurrency market. Such a situation could bring the first cryptocurrency closer to the psychological mark of $1 million, which Dorsey himself previously predicted would be reached by 2030.

Alarming Signal from a Technology Giant

In Silicon Valley, Jack Dorsey has long been considered Steve Jobs’ successor due to his outstanding technological achievements. Twitter changed the world of communications, while the Cash App payment service from Square (now Block) became one of the first corporate innovators in the Bitcoin sphere.

As far back as 2019, Cash App began offering BTC custody services that account holders could purchase using a credit card. In essence, its users began doing on a smaller scale exactly what later made MicroStrategy (now Strategy) a Wall Street sensation.

Today, Square has been renamed Block, and its shares just fell 20% at the start of May. Dorsey warned investors about turbulent times for the American consumer market.

“This coincided with inflows coming in below our expectations. During the quarter, non-discretionary Cash App Card spend in areas like grocery and gas was more resilient, while we saw a more pronounced impact on discretionary spending in areas like travel and media. We believe this consumer softness was a key driver of our forecast miss,” Dorsey stated after the publication of Block’s financial report.

This statement caused serious concern among investors. When the CEO of one of the world’s largest payment processing applications speaks about a sharp change in consumer spending patterns, the market listens carefully.

“Dorsey’s warning is particularly significant because Block has unique access to transaction data from millions of users. It’s a kind of real-time barometer of the economy’s state,” comments Alexei Morosov, lead analyst at financial company RBC Capital Markets.

Consumer Weakness as a Trigger for Fed Rate Cuts

The reduction in spending led to lower sales in the first quarter, which coincided with the first contraction of the US economy in three years. If this happens for a second consecutive quarter, the situation will meet the most commonly used formal definition of a recession by economists.

As a result, the central bank is likely to cut interest rates to stimulate business activity again. A CNBC survey shows that rate cuts are likely this year due to economic instability.

“The Fed is in a difficult situation. On one hand, inflation remains above the target, which argues for maintaining tight monetary policy. On the other hand, signs of economic slowdown are becoming increasingly evident, and the Federal Reserve cannot ignore these signals indefinitely,” notes Janet Reeves, a former Fed economist and now a professor of economics at Stanford University.

According to experts, if the US economy continues to contract in the second quarter of 2025, the Fed will likely initiate a rate-cutting cycle as early as the September meeting. This could be precisely the factor that launches a new bull cycle in the cryptocurrency market and potentially leads to Bitcoin reaching the psychological mark of $1 million.

Historical Context: Bitcoin and Interest Rates

History shows a clear correlation between Fed policy and Bitcoin price dynamics. When the Fed cut rates in 2007-2008, Bitcoin was just starting to operate. During the subsequent multi-year low interest rate regime, BTC prices soared from thousandths of a cent to $20,000 by December 2017.

By then, the Fed had raised rates again, and Bitcoin’s price had crashed. The cryptocurrency began to recover after the Fed slashed rates again in 2020 and soared to a new record high of $69,000 by November 2021.

“Bitcoin cycles correspond surprisingly accurately to monetary policy cycles. There’s a logical explanation for this: when money is cheap, investors look for riskier assets with potentially high returns. When money is expensive, the reverse process occurs,” explains Michael Sonnenshein, CEO of Grayscale Investments.

The current situation has similarities with previous cycles, but there is also a substantial difference: BTC’s price is already significantly above $100,000 even after the Fed’s third consecutive refusal to lower rates. This may indicate a fundamental change in global investors’ perception of Bitcoin and its increased resilience to traditional macroeconomic factors.

Dorsey’s Prediction: $1M per BTC by 2030

Jack Dorsey has repeatedly expressed his confidence in Bitcoin’s long-term potential. As early as 2021, he predicted that the first cryptocurrency would reach the $1 million mark by 2030. Given his experience in the technology sector and the early integration of Bitcoin into his companies’ ecosystem, this prediction cannot be dismissed.

“Dorsey is not just a random commentator. He was one of the first technology industry leaders to seriously integrate Bitcoin into corporate strategy. His forecasts deserve attention, even if they seem ambitious,” says Victoria Chang, partner at venture fund Andreessen Horowitz.

Reaching the $1 million mark would require approximately a tenfold increase from current levels. While this may seem incredible, it’s worth noting that Bitcoin has demonstrated even more impressive dynamics in previous cycles. Moreover, institutional adoption of cryptocurrency continues to grow, and traditional financial institutions are actively implementing Bitcoin-related products.

“In a world where central banks are once again beginning a cycle of monetary policy easing, and institutional investors are seeking protection from inflation and portfolio diversification, Dorsey’s prediction about Bitcoin reaching the $1 million mark no longer seems so fantastic,” summarizes Peter Schiff, investment strategist and CEO of Euro Pacific Capital.

Thus, paradoxically, Dorsey’s warning about consumer sector weakness, which is negative for his own company Block, could become a catalyst for historic Bitcoin growth in the coming years. Investors should closely monitor US macroeconomic indicators and Fed decisions regarding interest rates, as these factors may determine whether the Twitter founder’s bold prediction about Bitcoin reaching the $1 million mark will come true.