Bitcoin Could Slide Back to $70,000 in Q1 if the Federal Reserve Halts Rate Cuts

The crypto market enters 2026 in a climate of caution. Despite several rate cuts decided by the Fed in 2025, the expected rebound did not materialize. Bitcoin, Ether, and major assets declined, contrary to expectations. Monetary policy remains unclear, economic data are weakened, and the Fed hints that a pause could occur as early as the first quarter. This context rekindles tensions in an already weakened market.

The Fed hesitates, the crypto market wavers

On December 22, John Williams, President of the New York Federal Reserve, expressed a cautious position regarding the continuation of monetary policy.

Despite three consecutive 0.25% cuts made in 2025, including the latest one during this December, he stated he does not personally feel the need to intervene further on monetary policy for now, because he believes the cuts they have already made put them in a strong position.

This statement fits into a wait-and-see strategy, where the Fed seeks to avoid excessive easing. Williams emphasized the need for balance: he wants to see inflation drop to 2% without excessively harming the labor market. It’s a balancing act.

This signal of a pause in rate cuts comes in a context blurred by the consequences of the federal shutdown, which disrupted economic data collection. November inflation, announced at 2.63%, could have favored anticipation of more pronounced easing, but some economists, including Robin Brooks, believe these figures may be skewed.

Several factors explain the sector’s bearish reaction:

• Rates remain high despite cuts, fueling investor caution;
• The absence of a clear signal on monetary trajectory maintains uncertainty;
• Doubt about the reliability of inflation figures makes market expectations more difficult;
• Risk assets, including bitcoin, face sell-offs in the absence of solid catalysts.

Jeff Mei, Director of Operations at BTSE, summarizes the situation: “In this scenario, equities would waver, and crypto would get hit hard. Bitcoin could plunge to $70,000 as ETF outflows accelerate, and Ethereum could dip to $2,400.” This hypothesis is less based on the Fed’s past decisions than on the uncertainty maintained around the continuation of the monetary schedule.

A discreet but potentially decisive easing

While attention is heavily focused on key rates, a more discreet development in US monetary policy could have major repercussions on the crypto market.

Since December 1, the Fed has officially ended its quantitative tightening (QT) policy by opting for full rollover of maturing securities. It simultaneously launched a program called Reserve Management Purchases (RMP), which plans to purchase about $40 billion of short-term Treasury bills.

Although the Fed does not officially label this measure as “quantitative easing”, some analysts speak of “stealth QE”, or stealth quantitative easing.

This indirect liquidity injection could prove favorable to risk assets, including cryptos, even in the absence of new rate cuts. By comparison, during the massive QE of 2020-2021, the Fed’s balance sheet expanded by about $800 billion per month, accompanying a crypto market surge of more than $2,900 billion.

Analysts believe that if RMPs continue in the first quarter of 2026, even at a moderate pace, this could favor a recovery of flows into the sector. Jeff Mei considers that “bitcoin could climb between $92,000 and $98,000”, supported by “inflows into ETFs exceeding $50 billion and continued institutional accumulation”. For Ethereum, he mentions a target of $3,600, stimulated by the progress of layer 2 scalability solutions and yields related to staking.

The price of bitcoin is settling into a waiting phase, torn between macroeconomic uncertainties and conflicting technical signals. Faced with a cautious Fed and a market seeking direction, the trajectory of cryptos remains suspended on upcoming monetary decisions.