Bitcoin Surges 3.5% to $87,000 as Fed Signals Policy Shift

Bitcoin has recently shown signs of recovery, surging to $86,000 following the latest Federal Open Market Committee (FOMC) meeting. Former BitMEX CEO Arthur Hayes believes this is just the start of a significant rally. He predicts that the Federal Reserve will cut interest rates on April 1, which could trigger a substantial increase in Bitcoin's price. Hayes suggests that Bitcoin's recent dip to $77,000 marked the bottom, and he anticipates that the Fed's policy shift will bring more money into the market, driving Bitcoin higher.

Hayes also points out that the U.S. stock market might continue to decline, potentially forcing the Fed to intervene with policies that could benefit Bitcoin. He advises traders to stay agile and prepared for significant market movements. The FOMC minutes have confirmed that the Fed will reduce its monthly Treasury sales limit from $25 billion to $5 billion, indicating a slowdown in its tightening policy. This move has boosted market confidence and is seen as a positive sign for Bitcoin's future performance.

Following the FOMC meeting, Bitcoin quickly reacted by jumping 3.5% to $87,000, testing key resistance levels. Crypto analysts have noted that if Bitcoin closes above $86,351, it could break out and start a major rally. The rising M2 money supply, which has a strong correlation with Bitcoin's price, is another key factor. Experts suggest that even a small 10% increase in liquidity could more than double Bitcoin's price, potentially pushing it to $90,000 or higher in April.

While Hayes is optimistic about the end of quantitative tightening (QT) by April 1, not all analysts share his view. Some argue that QT is still ongoing, with the Fed reducing its balance sheet by $35 billion per month. However, if the Fed does lower rates as Hayes predicts, Bitcoin could experience a massive surge. With April approaching, all eyes are on the Fed's next meeting, which will be crucial in determining Bitcoin's future trajectory.