TLDR
- Bitcoin made a notable recovery from its $77,000 dip, with financial experts speculating that this might be the lowest it will go for now.
- The Federal Reserve has decided to slow down its quantitative tightening, cutting down monthly Treasury sales from $25 billion to a mere $5 billion.
- Over the past week, Bitcoin has seen a 3.53% rise, moving closer to the $87,000 threshold.
- Arthur Hayes speculates that potential interest rate cuts by the Federal Reserve on April 1 could invigorate cryptocurrency markets.
- There's a noticeable improvement in market sentiment, as indicated by the Crypto Fear & Greed Index, which has moved out of the 'Fear' category into a more 'Neutral' zone.
Bitcoin shows signs of bouncing back after it hit a recent low of $77,000, climbing back to around $86,000, bolstered by the Federal Reserve's decision to ease its grip on quantitative tightening.
On March 19, the Fed declared a significant policy shift, lowering its monthly Treasury selling cap to just $5 billion starting in April, a move that may favorably influence riskier assets, including Bitcoin.
Bitcoin's value has appreciated by 3.53% over the last week, with the cryptocurrency briefly touching $87,500 on March 20 before stabilizing around the $86,000 mark.
Arthur Hayes, the former BitMEX CEO, proposes that the recent dip to $77,000 might be Bitcoin's lowest point. He mentioned on March 20 that quantitative tightening is essentially wrapping up after the Fed's new announcement.
Arthur Hayes mentioned that with QT ending on April 1, further bullish movements depend on either an SLR exemption or resuming QE.
Was $BTC The $77k mark might indeed be the bottom, but stock markets could face more challenges before Jerome Powell fully aligns with Trump's policies, so staying flexible and liquid is advised.
— Arthur Hayes (@CryptoHayes) March 20, 2025
Hayes believes that an upward push could come from either a reintroduction of the Supplementary Leverage Ratio exemption or a refreshment of quantitative easing, actions that would boost liquidity and likely push Bitcoin prices higher.
During the COVID-19 pandemic, the Supplementary Leverage Ratio exemption allowed banks more leeway in managing US Treasury securities, simplifying asset holding for them.
Quantitative easing involves central banks increasing the money supply by purchasing securities, aiming to stimulate the economy and encourage spending.
Fed Shift Boosts Bitcoin Outlook
Jamie Coutts, Real Vision's leading crypto analyst, agreed with Hayes' perspective, noting that 'QT is effectively finished,' and reflecting on the reduced volatility in treasuries following a drop in the US dollar earlier this month.
Jeff “JiHo” Zirlin from Axie Infinity sees the Fed's policy adjustment as advantageous for both crypto and equity markets, suggesting it gives the Fed more room to support businesses and markets.
The mood in the crypto space is improving following these shifts. The Crypto Fear & Greed Index has risen to a 'Neutral' level of 49, moving out of the 'Fear' zone where it lingered since February 26.
Despite Bitcoin slipping almost 22% from its January pinnacle of $109,000, a wave of optimism is felt among analysts. Infinex founder Kain Warwick called the recent dips a typical 'mid-bull correction.'
Kain Warwick conveyed to Cointelegraph his belief that only a significant downturn would sway him to a bearish outlook. He anticipates Bitcoin will continue its upward journey throughout the year, in line with the historical four-year cycle.
Rumors about a significant shake-up in US cryptocurrency regulations are fueling market optimism, suggesting that a key announcement might come on March 21, potentially altering the strategic landscape after President Trump's prior executive measures. Bitcoin Reserve.
When Trump signed this executive order earlier in the month, the markets maintained stability, possibly due to the absence of direct US government involvement in Bitcoin acquisitions.
Some analysts like Benjamin Cowen aren't convinced by Hayes' predictions regarding policy timelines. Cowen argues that while QT is slowing, the Fed remains on track to trim its balance sheet by $35 billion per month through mortgage-backed securities.
The S&P 500 reacted well to the Fed's latest measures, ending the March 20 trading session up about 1%, adding around $500 billion to its market capitalization.
Fed Chairman Jerome Powell mentioned in a press briefing that inflation has 'calmed down,' justifying their current strategy. Powell emphasized there's no urgency to reassess policy, as they are strategically positioned to await further clarity.
For Bitcoin Analysts point out that Bitcoin needs to close above $86,351 to break past its diagonal resistance, with its price potentially mirroring the increasing M2 money supply.
Bitcoin's high correlation with the M2 money supply, coupled with leverage factors, suggests that even minor shifts in liquidity could significantly influence its value. Experts say a 10% liquidity boost could more than double Bitcoin's worth.
