Key insights:
-
Fed pauses could pressure crypto, but “stealth QE” could mitigate downside risks.
-
Liquidity is more essential than cuts and can determine the direction of BTC and ETH in the primary quarter of 2026.
The Federal Reserve cut rates of interest 3 times in 2025, mostly in the ultimate quarter as unemployment rose and inflation showed clearer signs of slowing.
But the crypto markets reacted counter-intuitively. Instead of recovering on dovish policy, Bitcoin (BTC), Ether (ETH) and major altcoins sold off, with total market capitalization plunging by greater than $1.45 trillion from its record high in October.
TOTAL Crypto Market Cap Monthly Chart. Source: TradingView
Let's examine how the central bank's policies could play out by March 2026 and what possible impact it should have on the broader crypto market.
Bitcoin and Ether may fall more if the Fed pauses rate of interest cuts
Despite the three consecutive 0.25% rate cuts, most Fed officials, including New York President John Williams, stressed the risks of inflation and data dependence and gave no clear signal of further easing.
“I personally don't feel like there's any urgency in the meanwhile to act further on monetary policy because I believe the cuts we've made have positioned us very well,” Williams said on Friday, adding:
“I would like inflation to fall to 2% without unduly hurting the job market. It's a balancing act.” 
US core inflation. Source: Bureau of Labor Statistics/Bloomberg
As a result, November's CPI of two.63% is more likely to increase rate cut possibilities for the primary quarter of 2026.
Still, the record-breaking U.S. government shutdown disrupted data collection by the Bureau of Labor Statistics. Some economists, including Robin Brooks, apprehensive that this may occasionally have distorted annual inflation readings for November.
Source: X
This uncertainty helps explain why crypto has did not get better in recent months attributable to the cuts themselves.
Jeff Mei, chief operating officer of crypto exchange BTSE, said BTC could fall to $70,000 and ETH as little as $2,400 if the Fed keeps rates of interest stable in the primary quarter of 2026.
The Fed’s “Secret QE” Could Stabilize Crypto Prices
On December 1, the Federal Reserve officially ended quantitative tightening and moved to full rebalancing of maturing Treasury bonds and mortgage-backed securities to stop further reserve outflows.
Reserve management purchases (RMPs), short-term purchases of presidency securities price around $40 billion, were then introduced to stabilize bank reserves and ease money market stress. Some analysts are calling this move a type of quantitative easing or “stealth QE.”
In comparison, the Fed's balance sheet increased by about $800 billion every month during quantitative easing in 2020-2021, when cryptocurrency market capitalization increased by over $2.90 trillion.
TOTAL Crypto Market Cap Compared to Fed Balance Sheet Monthly Performance Chart. Source: TradingView
If RMPs progress more slowly in the primary quarter of 2026, they might quietly inject liquidity, encourage risk-taking and stabilize crypto prices even without aggressive rate of interest cuts.
“This means Bitcoin could rise to $92,000-$98,000, supported by sustained ETF inflows of over $50 billion and institutional accumulation,” Mei wrote, adding:
“Ethereum could rally towards $3,600, benefiting from recent improvements in Layer 2 scaling and redistribution of yields which are attracting DeFi users.
This article doesn’t contain any investment advice or recommendations. Every investment and trading activity involves risks and readers should conduct their very own research when making their decision. While we attempt to supply accurate and up-to-date information, Cointelegraph doesn’t guarantee the accuracy, completeness or reliability of the data in this text. This article may contain forward-looking statements which are subject to risks and uncertainties. Cointelegraph won’t be chargeable for any loss or damage arising out of your reliance on this information.
This article doesn’t contain any investment advice or recommendations. Every investment and trading activity involves risks and readers should conduct their very own research when making their decision. While we attempt to supply accurate and up-to-date information, Cointelegraph doesn’t guarantee the accuracy, completeness or reliability of the data in this text. This article may contain forward-looking statements which are subject to risks and uncertainties. Cointelegraph won’t be chargeable for any loss or damage arising out of your reliance on this information.
