TLDR
- Bitcoin reached two-week highs of nearly $87,500 amid rumors of a US government crypto policy update
- Fed’s decision to hold interest rates and project two cuts by end of 2025 relieved market tensions
- Former BitMEX CEO Arthur Hayes suggests $77,000 may have been the bottom for Bitcoin
- Quantitative tightening (QT) is slowing down with Treasury caps reducing from $25B to $5B monthly starting April
- Market sentiment has improved from “Fear” to “Neutral” on the Crypto Fear & Greed Index
Bitcoin price jumped to two-week highs on March 20, reaching nearly $87,500 on Bitstamp. The price move came as markets reacted to the Federal Reserve’s decision to maintain current interest rates and rumors about an upcoming US government crypto policy update.
The price of Bitcoin has been consolidating near $86,000 after the surge. This rally represents a 3.5% increase following the Federal Open Market Committee (FOMC) meeting where officials chose to keep interest rates at 4.5%.
Fed Chair Jerome Powell described inflation as having “eased significantly” during the meeting. The Fed also confirmed their outlook of two potential rate cuts by the end of 2025.
“We do not need to be in a hurry to adjust our policy stance, and we are well positioned to wait for greater clarity,”
Powell stated in his opening remarks. This measured approach helped calm nervous investors in both traditional and crypto markets.
The S&P 500 ended up by around 1% for the March 20 session. This added about $500 billion in market cap to the index.
Arthur Hayes Says Bottom is In
Bitcoin’s recovery from recent lows has caught the attention of market analysts. Arthur Hayes, former CEO of crypto exchange BitMEX, suggested that the recent drop to $77,000 likely marked the bottom for Bitcoin.
Hayes pointed to the Fed’s announcement regarding quantitative tightening (QT) as a key factor. Starting in April, the Fed will slow its securities sell-off by reducing the monthly Treasury cap from $25 billion to $5 billion.
“JAYPOW delivered, QT basically over Apr 1,” Hayes wrote on social media. He indicated that further positive developments could include either a Supplementary Leverage Ratio (SLR) exemption or a restart of quantitative easing (QE).
JAYPOW delivered, QT basically over Apr 1. The next thing we need to get bulled up for realz is either SLR exemption and or a restart of QE.
Was $BTC $77k the bottom, prob. But stonks prob have more pain left to fully convert Jay to team Trump so stay nimble and cashed up.
— Arthur Hayes (@CryptoHayes) March 20, 2025
Market watchers are also focused on potential changes to US crypto policy. Rumors suggest that President Trump may announce a “major update” to his crypto strategy as soon as March 21.
This would be Trump’s first major crypto policy update since March 6. On that date, he signed an executive order to create a Strategic Bitcoin Reserve.
When the reserve was initially announced, markets showed a restrained response. This came after learning that the plan would not necessarily involve the US government purchasing Bitcoin directly.
Technical Analysis
Technical analysts see positive signs in Bitcoin’s recent price action. “Bitcoin only needs to rally an additional +8% to position itself for a reclaim of the Range above and end this downside deviation,” noted trader and analyst Rekt Capital.
The improvement in market sentiment is reflected in the Crypto Fear & Greed Index. The index has moved from “Fear” territory to “Neutral” at 49, the first time since February 26 it has left the “Fear” range.
Bitcoin only needs to rally an additional +8% to position itself for a reclaim of the Range above and end this downside deviation
Is that a lot, considering BTC is up almost +13% since last week’s lows?$BTC #Crypto #Bitcoin https://t.co/94D0ESTQF0 pic.twitter.com/CSLlUdqnkZ
— Rekt Capital (@rektcapital) March 19, 2025
Some analysts believe the Fed may need to act if economic pressures mount. President Trump wrote on Truth Social: “The Fed would be MUCH better off CUTTING RATES as U.S. Tariffs start to transition (ease!) their way into the economy. Do the right thing. April 2nd is Liberation Day in America!!!”
Not all analysts agree with Hayes’ assessment that QT is ending. Crypto analyst Benjamin Cowen noted that while the pace of QT has slowed, it continues at $35 billion per month through mortgage-backed securities.
Despite Bitcoin being down nearly 22% from its January all-time high of $109,000, many market participants remain optimistic. Infinex founder Kain Warwick described the recent price action as a “normal mid-bull correction.”
“I would need to see a much larger breakdown to flip bearish,” Warwick said. “My baseline thesis is the four-year cycle holds once again, which means we keep grinding up through the rest of the year.”
For Bitcoin to resume its uptrend, traders note it must close above the diagonal resistance of $86,351. Bitcoin has bounced back from the supertrend support, according to analyst IncomeSharks.
The Bitcoin price action may soon follow the M2 money supply, which has been rising recently. Analysts point out that even a 10% increase in liquidity could result in more than doubling Bitcoin’s price due to its high correlation with M2.
Alongside Bitcoin, altcoins have also shown strength following the FOMC meeting. Top cryptocurrencies like Ethereum (ETH), XRP, Solana (SOL), and Dogecoin (DOGE) have rebounded 4-10% in the last 24 hours.
Bitcoin ETF inflows have resumed once again. BlackRock’s IBIT product is leading the charge in bringing new institutional capital into the market.
