Fed Q1 2026 Outlook: Potential Impact On Bitcoin And Crypto Markets

BTC may fall to $70,000 and ETH to $2,400 if the Fed pauses rate cuts in the first quarter of 2026 and inflationary pressure persists.

Fed pauses could pressure crypto, but “stealth QE” may cushion downside risks.

Liquidity matters more than cuts, shaping the direction of BTC and ETH in Q1 2026.

The US Federal Reserve cut interest rates three times in 2025, largely in the final quarter, as unemployment ticked higher and inflation showed clearer signs of cooling.

Yet crypto markets reacted counterintuitively. Rather than rallying on dovish policy, Bitcoin (BTC), Ether (ETH), and major altcoins sold off, with total market capitalization shedding more than $1.45 trillion from its record high in October.

Let’s examine how the central bank’s policies may fare into March 2026 and their potential impact on the broader crypto market.

Despite delivering three consecutive 0.25% rate cuts, most Fed officials, including New York President John Williams, stressed the risk of inflation and data dependence, offering no clear signal of further easing.

“I don’t personally have a sense of urgency to need to act further on monetary policy right now, because I think the cuts we’ve made have positioned us really well,” Williams said on Dec. 19, adding:

As a result, November’s 2.63% CPI should raise rate-cut odds for Q1 2026.

Still, the record US government shutdown disrupted the Bureau of Labor Statistics’ data collection. Some economists, including Robin Brooks, feared that it may have potentially distorted November’s annual inflation readings.

Source: CoinTelegraph