TLDR
- Bitcoin recently dropped to $77,000 but has rebounded 3.5% following the Fed’s announcement to slow quantitative tightening
- The Fed will reduce Treasury securities sell-off from $25 billion to $5 billion monthly starting in April
- Arthur Hayes and other analysts believe $77K could be the bottom for Bitcoin
- Crypto market sentiment has improved, moving from “Fear” to “Neutral” territory
- Some analysts predict Fed rate cuts could begin as early as April 1
The price of Bitcoin has seen a modest recovery after the Federal Reserve announced plans to slow down its quantitative tightening (QT) program. This policy shift has sparked optimism among crypto analysts who believe the worst may be over for the leading cryptocurrency.
Bitcoin recently touched the $77,000 mark for the first time since November. This represented a significant drop from its all-time high of $109,000 reached in January this year.
The dip was short-lived, however. BTC has since rebounded 3.5% over the past seven days, trading at around $86,213 at the time of writing.
This recovery comes after the Federal Reserve’s March 19 announcement. The Fed stated it would slow its securities sell-off by reducing the monthly Treasury cap from $25 billion to just $5 billion starting in April.
The bottom is in
Arthur Hayes, co-founder of BitMEX, expressed confidence that Bitcoin has already found its bottom. In a March 20 post on X (formerly Twitter), Hayes declared that quantitative tightening is “basically over” and suggested $77,000 was likely the bottom for Bitcoin.
Hayes added that for Bitcoin to see a stronger bullish trend, either a Supplementary Leverage Ratio (SLR) exemption or a restart of quantitative easing (QE) would be needed. The SLR exemption was a temporary rule during the COVID-19 pandemic that allowed banks to exclude US Treasury securities from their calculations.
Other analysts share Hayes’ optimistic outlook. Jamie Coutts, Real Vision’s chief crypto analyst, echoed the sentiment that “QT is effectively dead.” He pointed to calming treasury volatility and the recent drop in the US dollar as positive signals for increased liquidity.
Jeff “JiHo” Zirlin, co-founder of Axie Infinity, also weighed in on the Fed’s decision. He described the slowdown as “great for both crypto and equity markets,” adding that the Fed has “significant leeway to loosen up, providing more support for businesses and markets.”
Market sentiment has shown clear signs of improvement following the Fed’s comments. The Crypto Fear & Greed Index, which tracks overall market sentiment, has moved into “Neutral” territory at 49 after sitting in the “Fear” area since February 26.
Despite the recent drop, some experts view this as a normal market correction. Kain Warwick, founder of Infinex, told Cointelegraph that the recent price action represents a “normal mid-bull correction.”
Warwick maintained a bullish outlook, stating, “I would need to see a much larger breakdown to flip bearish. My baseline thesis is the four-year cycle holds once again, which means we keep grinding up through the rest of the year.”
Some analysts are even more ambitious in their predictions. They suggest that the Fed might begin cutting interest rates as early as April 1. This sentiment aligns with recent comments from US President Donald Trump, who wrote on Truth Social that “The Fed would be MUCH better off CUTTING RATES as U.S. Tariffs start to transition (ease!) their way into the economy.”
The potential for increased liquidity is seen as a strong positive for Bitcoin prices. Market watchers note that even small changes in liquidity can have a big impact on BTC. For instance, some analysts suggest that a 10% increase in liquidity could more than double Bitcoin’s value.
Not all analysts agree on the timing, however. Crypto analyst Benjamin Cowen disputes Hayes’ prediction that quantitative tightening will end by April 1. Cowen clarified that while QT has been adjusted, it is far from over.
“QT is not ‘basically over’ on April 1,” Cowen stated.
He explained that the Federal Reserve is still reducing its balance sheet by $35 billion per month through mortgage-backed securities.
The easing of quantitative tightening could relieve liquidity pressures and support risk assets like Bitcoin. QT involves central banks selling assets to reduce the money supply, which can potentially lead to higher interest rates.
Following the FOMC meeting, Bitcoin’s price action has shown renewed strength. Popular analyst IncomeSharks noted that BTC has bounced back from the supertrend support. For BTC to resume its uptrend, however, it must close above the diagonal resistance of $86,351.
The recovery extends beyond Bitcoin. Other cryptocurrencies have also shown strength following the FOMC meeting. Top altcoins like Ethereum (ETH), XRP, Solana (SOL), and Dogecoin (DOGE) have bounced back 4-10% in the last 24 hours.
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