Bitcoin could plunge back to $70,000 in the first quarter if the Fed suspends its 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 the main assets fell, contrary to expectations. Monetary policy remains unclear, economic data is weakened, and the Fed suggests that a pause could occur as early as the first quarter. This context rekindles tensions in an already weakened market.

The Fed delays, the crypto market falters

This December 22, John Williams, president of the Federal Reserve of New York, expressed a cautious position on the continuation of monetary policy.

Despite three consecutive reductions of 0.25% in 2025, the last of which took place this month of December, it declared : “I don't personally feel the need to intervene further on monetary policy at the moment, because I think the cuts we have already made put us in a solid position”.

This statement is part of a wait-and-see strategy, where the Fed seeks to avoid excessive easing. Williams emphasized the need for balance: “I want to see inflation fall to 2% without excessively harming the job market. It's a balancing act.”.

This signal of a pause in rate cuts comes in a context clouded by the consequences of the federal shutdown, which disrupted the collection of economic data. Inflation in November, announced at 2.63%, could have encouraged expectations of a more pronounced easing, but some economists, including Robin Brooks, believe that these figures could be distorted.

Several elements explain the bearish reaction of the sector:

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

Jeff Mei, Director of Operations at BTSE, summary the situation: “ In this scenario, stock markets would falter and cryptocurrencies would be hit hard. Bitcoin could fall as low as $70,000 on accelerating ETF outflows, while ether could retreat towards $2,400. ». This hypothesis is based less on past decisions by the Fed than on the vagueness maintained around the rest of the monetary calendar.

A discreet, but potentially decisive, relaxation

While the focus is overwhelmingly on policy rates, a quieter shift in US monetary policy could have major repercussions on the crypto market.

Since 1^er December, the Fed officially ended its quantitative tightening (QT) policy, opting for full rollover of maturing securities. It simultaneously launched a program called Reserve Management Purchases (RMP), involving the purchase of approximately $40 billion in short-term Treasury bonds.

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

This indirect injection of liquidity could prove favorable to risky assets, including cryptos, even in the absence of further rate cuts. For comparison, during the massive QE of 2020-2021, the Fed's balance sheet swelled by around $800 billion per month, accompanying a surge in the crypto market of over $2.9 trillion.

Analysts believe that if RMPs continue in the first quarter of 2026, even at a moderate pace, this could encourage a resumption of flows into the sector. Jeff Mei considers that “bitcoin could climb between $92,000 and $98,000”carried by “ETF inflows exceeding $50 billion and continued institutional accumulation”. For Ethereum, he cites a target of $3,600, driven by progress in layer 2 scalability solutions and staking-related returns.

The price of bitcoin is settling into a waiting phase, torn between macroeconomic uncertainties and contradictory technical signals. Faced with a cautious Fed and a market in search of direction, the trajectory of cryptos remains suspended from the next monetary arbitrages.