Bitcoin surged past $85,000 on March 19, fueled by the Federal Reserve’s decision to scale back its quantitative tightening (QT) program starting in April. The Fed announced it would reduce monthly Treasury security roll-offs from $25 billion to $5 billion, a move markets interpreted as an indirect interest rate cut. This pivot triggered a broad rally across risk assets, with Bitcoin jumping from $84,235 to nearly $86,000 before settling around $85,363, according to CryptoSlate data.
The central bank’s policy shift signalled improved liquidity conditions, particularly for dollar-denominated assets like Bitcoin. Analysts highlighted the tapering of QT as a critical factor in boosting crypto markets. Jamie Coutts, chief crypto analyst at Real Vision, noted the decline in Treasury volatility and its alignment with a weaker U.S. Dollar Index, emphasizing these developments as “extremely liquidity-positive” for Bitcoin. The decision followed the Federal Open Market Committee’s median forecast of 50 basis-point rate cuts in 2025, though policymakers maintained current interest rates between 4.25% and 4.5%.
While Bitcoin rallied nearly 2%, altcoin performance varied. Ethereum edged up 0.6% to $2,039, while Solana outpaced peers with a 7% gain to cross $130. By contrast, XRP and BNB saw minimal movements. Traditional markets mirrored the optimism, with the Dow Jones Industrial Average climbing 400 points and the S&P 500 gaining 77 points.
Options traders showed renewed bullishness, with derivatives data indicating improved sentiment. However, analysts cautioned about near-term resistance levels. On Balance Volume (OBV) metrics suggested selling pressure still looms, and sustaining momentum will require reclaiming key technical thresholds. QCP Capital described Bitcoin’s rebound as a “relief bounce” dependent on continued liquidity support.
Federal Reserve Chair Jerome Powell clarified that the QT adjustments were operational rather than strategic, intended to ensure market stability. Despite this tempered messaging, crypto observers remain watchful of how reduced balance sheet runoff might influence asset valuations through 2025. Arthur Hayes and other analysts suggest the Fed’s liquidity boost may have solidified Bitcoin’s recent $77,000 floor, though upcoming trading sessions will test the durability of this rally.
Sources:
Bitcoin reclaims $85k after Fed signals slowdown in quantitative tightening
https://cointelegraph.com/news/bitcoin-runs-toward-86-k-after-fed-maintains-course-projecting-two-rate-cuts-in-2025
https://ambcrypto.com/bitcoin-reclaims-85k-as-fed-scales-back-qt-whats-next/
