Federal Reserve Policy Shift Creates Mixed Outlook for Bitcoin and Crypto Markets in 2026

Fed Ends Quantitative Tightening, Launches Treasury Purchases

The Federal Reserve formally ended quantitative tightening on December 1, shifting to full rollovers of maturing Treasury and mortgage-backed securities to halt further reserve drain ^[1]. The central bank then launched Reserve Management Purchases (RMPs), approximately $40 billion in short-term Treasury bill purchases, to stabilize bank reserves and ease money market stress ^[1].

Some analysts describe this move as a form of quantitative easing, or "stealth QE" ^[1]. If RMPs continue into the first quarter of 2026 at a slower pace, they could quietly inject liquidity, supporting risk appetite and stabilizing crypto prices even without aggressive rate cuts ^[1].

Rate Cut Uncertainty Poses Downside Risk

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 ^[1].

"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 December 19, adding: "I want to see inflation come down to 2% without doing undue harm to the labor market. It's a balancing act" ^[1].

This cautious stance from Fed officials creates uncertainty for Bitcoin and Ethereum, which could face sharper drops if the central bank pauses rate cuts ^[1].

Potential Price Scenarios for Major Cryptocurrencies

If the Fed's liquidity measures continue, Bitcoin could climb to $92,000-$98,000, supported by ongoing ETF inflows surpassing $50 billion and institutional accumulation, according to analyst Mei ^[1]. Ethereum could push toward $3,600, benefiting from recent layer-2 scaling improvements and restaking yields that attract DeFi users ^[1].

Market Divided on Growth Predictions

Beyond Federal Reserve policy, the crypto community remains divided on broader economic forecasts affecting digital assets. Bitcoin entrepreneur Anthony Pompliano responded to Elon Musk's economic predictions, stating "the world's richest man is predicting double-digit GDP growth within 18 months. Says over 100% GDP growth is possible if AI fulfills its true potential" ^[2].

Real World Asset yield infrastructure provider Oryon Finance said Musk's predictions are "usually not random noise" ^[2]. However, some market watchers questioned the accuracy of Musk's forecasts, with Artem Russakovskii saying that Musk's predictions are not his "strongest suit" ^[2].

Bear Market Concerns Persist

Despite optimistic scenarios, concerns about a potential Bitcoin bear market in 2026 continue to circulate. Market commentator Bariksis said in response to Musk's post that despite his prediction "we are going into a bear market in 2026" ^[2].

Veteran trader Peter Brandt and Fidelity researcher Jurrien Timmer both said in December that Bitcoin may land in the $60,000 price range in 2026 ^[2].

The divergent outlooks underscore the uncertainty facing crypto markets as the Federal Reserve navigates the balance between controlling inflation and supporting economic growth through its monetary policy tools. Whether the Fed's liquidity measures prove sufficient to support risk assets like cryptocurrencies, or whether a pause in rate cuts triggers a broader market correction, remains to be seen in the coming quarters.