Analysts say Bitcoin could face a sharp correction if the Fed leaves interest rates unchanged until the first quarter of 2026.
BTSE Chief Operating Officer Jeff May predicts that in this scenario, Bitcoin could fall to $70,000 and Ethereum to $2,400.
May said the Fed ended its quantitative tightening (QT) process on December 1, 2025 and began a Reserve Management Purchase (RMP) program for short-term Treasuries, but the actions it takes on interest rates will be decisive for the market. The program involves purchases of about $40 billion a month and is considered by some analysts to be “covert quantitative easing” (QE).
Jeff May said that if the RMP program continues into the first quarter of 2026, it could provide net liquidity to the market and support risk assets. In this scenario, May predicted that Bitcoin could rise to the $92,000 to $98,000 range, while Ethereum could reach $3,600 due to the development of Layer 2 scaling and the resurgence of the DeFi ecosystem. More than $50 billion in ETF inflows and institutional investor accumulation could also support the rally, the analyst said.
May noted that the Fed has been trying to strike a delicate balance over the past year between a cooling labor market and persistent inflation, recalling three consecutive rate cuts that brought the policy rate to a range of 3.50% to 3.75%. However, he said the hawkish message from the December meeting caught the market off guard and led to a sell-off in Bitcoin and Ethereum.
According to May, the FOMC meetings in January (28th-29th), March (18th-19th), and May (6th-7th) will be “make-or-break” for the crypto market. The analyst noted that the Fed is cautious about cutting rates as inflation remains above its 2% target, but added that it could continue to inject liquidity into the system through alternative measures such as bond purchases.
In the most likely scenario, the Fed could cut rates once by 25 basis points at its January meeting, then wait until March. In this scenario, Bitcoin is expected to rise to the $92,000 to $98,000 range and Ethereum is expected to approach $3,600. Analysts believe that patient investors could benefit from a staged buying strategy in this environment.
It has been suggested that the Fed could cut rates two more times by June if the labor market deteriorates significantly or inflation falls below 2%. In this scenario, Bitcoin could rise above $125,000, while Ethereum could rise to $4,800 thanks to spot ETFs, increased Total Value Lock (TVL), and tokenization of real-world assets. The market capitalization of cryptocurrencies could increase by 25-35% to $4 trillion.
If inflation persists and the Fed does not cut rates in the first quarter of 2026, the market situation could reverse. In this scenario, Bitcoin could fall to $70,000 and Ethereum to $2,400. Analysts suggest that in such an environment, investors may increase their stablecoin holdings in search of purchase opportunities at lower levels.
*This is not investment advice.
