According to analysis from BTSE COO Jeff Mei, Bitcoin (BTC) and Ethereum (ETH) are entering a critical period where their price trajectories will be heavily influenced by the Federal Reserve's interest rate policy in the first half of 2026. Mei identifies the upcoming January, March, and May FOMC meetings as "make or break" for the crypto market.
The bullish scenario hinges on the Fed continuing its Reserve Management Purchases (RMP) program—a form of liquidity injection involving monthly purchases of approximately $40 billion in short-term Treasury bonds—and implementing interest rate cuts. If this supportive policy continues, Mei predicts Bitcoin could rise to the $92,000–$98,000 range. Ethereum, bolstered by layer-2 scaling developments and a DeFi revival, could reach $3,600. This outlook is further supported by potential ETF inflows exceeding $50 billion and ongoing institutional accumulation.
In an even more optimistic case where the Fed implements two more rate cuts by June due to a weakening labor market or inflation falling below its 2% target, Bitcoin could surge above $125,000. Ethereum could climb to $4,800, driven by spot ETF approvals, increasing Total Value Locked (TVL), and real-world asset tokenization. This could push the total cryptocurrency market capitalization up by 25-35% to around $4 trillion.
The bearish scenario emerges if inflation proves persistent and the Fed refrains from cutting interest rates in Q1 2026. In this environment, Mei warns that Bitcoin could face a sharp correction to $70,000, with Ethereum potentially falling to $2,400. This view is informed by the market's negative reaction to hawkish Fed messages in December 2025, which led to sell-offs in both assets.
Separately, BlackRock strategists Amanda Lynam and Dominique Bly provided a macroeconomic context, noting the Fed has already cut rates by 175 basis points in the current cycle. They suggest that unless the labor market weakens significantly, the room for aggressive further cuts in 2026 is limited. This aligns with market data pricing in only two rate cuts for the year. Conversely, advisors to the Trump administration, like Joe Lavorgna, argue that pro-growth policies could allow for continued rate cuts without stoking inflation, presenting a differing perspective on the Fed's potential path.
