According to one analyst, the first quarter of 2026 will be a critical period for the Bitcoin price. Here’s what you need to know.
According to analysts, if the Fed keeps interest rates unchanged in the first quarter of 2026, Bitcoin could face a sharp correction.
BTSE COO Jeff Mei predicts that in this scenario, Bitcoin could fall to $70,000 and Ethereum to $2,400.
According to Mei, although the FED has ended its quantitative tightening (QT) process as of December 1, 2025, and launched its Reserve Management Purchases (RMP) program covering short-term Treasury bonds, the steps to be taken on the interest rate side will be decisive for the markets. This program, which involves monthly purchases of approximately $40 billion, is considered by some analysts as “covert quantitative easing (hidden QE)”.
Jeff Mei stated that if the RMP program continues until the first quarter of 2026, it could provide net liquidity to the markets and support risky assets. In this scenario, Mei predicted Bitcoin could rise to the $92,000-$98,000 range, while Ethereum could reach $3,600 with layer-2 scaling developments and a revival in the DeFi ecosystem. According to the analyst, ETF inflows exceeding $50 billion and institutional accumulation could also support this rise.
Mei noted that the Fed has been trying to strike a delicate balance between a cooling labor market and persistent inflation over the past year, recalling that three consecutive interest rate cuts brought the policy rate down to the 3.50-3.75 percent range. However, she said that the hawkish messages given at the December meeting caught the markets off guard and led to sell-offs in Bitcoin and Ethereum.
According to Mei, the January (28-29), March (18-19), and May (6-7) FOMC meetings will be “make or break” for the crypto market. The analyst noted that the Fed is being cautious about interest rate cuts because inflation is still above its 2% target, but added that it could continue to inject liquidity into the system through alternative tools such as Treasury bond purchases.
In the most likely scenario, the Fed may implement a single 25 basis point interest rate cut at its January meeting and then wait in March. In this scenario, Bitcoin is expected to rise to the $92,000-$98,000 range, while Ethereum is expected to approach $3,600. Analysts believe that patient investors could gain an advantage with a gradual buying strategy in this environment.
It is suggested that the Fed could implement two more interest rate cuts by June if there is a significant weakening in the labor market or inflation falls below 2%. In this scenario, Bitcoin could rise above $125,000, while Ethereum could climb to $4,800 thanks to spot ETFs, increasing total value locked (TVL), and the tokenization of real-world assets. A 25-35% increase in the total cryptocurrency market capitalization to $4 trillion is also among the possibilities.
If inflation becomes persistent and the Fed does not cut interest rates in the first quarter of 2026, market conditions could reverse. In this scenario, Bitcoin could fall to $70,000 and Ethereum to $2,400. Analysts suggest that in such an environment, investors might increase their holdings of stablecoins, seeking buying opportunities at lower levels.
