The Fed's dot plot determines Bitcoin's future: Analysts predict three possible scenarios for cryptocurrencies

Decisions of the Federal Open Market Committee (FOMC) in 2026 will determine the trajectory of the entire cryptocurrency market. Jeff Mei from BTSE presents a detailed rate map showing how Fed monetary policy influences Bitcoin and Ethereum valuations. According to the analyst, four hearings scheduled for February, March, May, and June will be “key” to the direction the digital asset sector will take.

Neutral Scenario: Financing Costs Remain High

If the Fed maintains its monetary policy stance unchanged in the first quarter of 2026, the cryptocurrency market will face downward pressure. Mei predicts that Bitcoin could drop to $70,000, while Ethereum could fall to $2,400. This scenario would result from the sustained interest rate level of 3.50–3.75 percent. Although the Fed ended its formal quantitative tightening (QT) process in early December 2025, the Reserve Management Purchases (RMP) program—purchasing government bonds of about $40 billion monthly—would not provide sufficient liquidity for the markets.

Under high financing costs, investors may shift capital into more conservative assets, and pressure on higher-risk assets would increase.

Moderate Growth: One Cut in January Changes Dynamics

The biggest chance for the bulls is based on the Fed cutting rates by 25 basis points during the January (28-29) meeting, then waiting until April or May for the next move. In this scenario, the rate map would become more favorable for digital assets. Ei forecasts Bitcoin reaching the $92,000–$98,000 range, with Ethereum approaching $3,600.

This scenario would be supported by continued Treasury bond purchases by the Fed (RMP program), which some analysts describe as “hidden quantitative easing.” Inflows into spot Bitcoin and Ethereum ETFs exceeding $50 billion, combined with institutional accumulation, could further drive growth. Layer 2 solutions for Ethereum and ecosystem DeFi revival could support the price of the largest altcoin.

Optimistic Scenario: Aggressive Easing Conditions

If the economy shows signs of significant weakening or inflation falls below the Fed’s 2% target, there could be two additional rate cuts of 25 basis points by June. In this case, the Fed rate map would be clearly accommodative, potentially catalyzing a strong upward move in cryptocurrencies.

Mei assumes Bitcoin could rise above $125,000, and Ethereum could reach $4,800. Such a scenario would be supported by spot ETF exposure, increasing total value locked (TVL) in DeFi protocols, and accelerated tokenization of real assets. The total market capitalization of the entire crypto sector could increase by 25–35%, reaching $4 trillion.

What Can Investors Do Right Now?

Analysts recommend patient investors adopt a dollar-cost averaging (DCA) strategy in the current market environment. This tactic allows for profit-taking regardless of which scenario materializes. In a pessimistic variant, investors should consider increasing their holdings in stablecoins and waiting for significant discounts.

The key to success in the coming months will be closely monitoring Fed communications and the treasury rate map, which signal changes in monetary policy.