Bitcoin Surges 13% on US Crypto Policy Rumors, Fed Rate Cut Hints

Bitcoin (BTC) surged to two-week highs on March 20, driven by rumors that the US government was preparing a significant update to its cryptocurrency policy. Data from market analysis tools showed BTC/USD reaching nearly $87,500 on major exchanges. Currently, Bitcoin is consolidating near $86,000, benefiting from a relatively calm Federal Reserve meeting the previous day, where officials decided to maintain interest rates at current levels. Policymakers indicated that they anticipate two rate cuts by the end of 2025, with Fed Chair Jerome Powell describing inflation as having "eased significantly." Powell emphasized a "wait-and-see" approach, stating that there is no urgency to adjust policy stance and that the Fed is well-positioned to wait for greater clarity. This cautious stance provided relief to risk assets, including Bitcoin, which joined US stocks in surging and finishing the day higher. The S&P 500 ended the March 20 session with a gain of around 1%, adding $500 billion in market capitalization.

Arthur Hayes, former CEO of a prominent crypto exchange, suggested that the Fed's decision delivered a key signal for traders to add risk. He noted that quantitative tightening (QT) is essentially over by April 1, and the next step for a bullish market would be either an exemption from the Supplementary Leverage Ratio (SLR) or a restart of quantitative easing (QE). Hayes also speculated that Bitcoin's recent low of $77,000 might have been the bottom, but cautioned that stocks might still face more pain before fully converting to a Trump-friendly stance.

Despite the Fed's influence, Bitcoin traders were more focused on a potential change in US crypto policy, with rumors suggesting an announcement could come on March 21. This would be the first major update since the establishment of the national crypto reserve on March 6. Rumors indicated that President Trump might be making significant changes to his crypto strategy. When Trump signed an executive order to create a Strategic Bitcoin Reserve earlier this month, markets remained surprisingly calm as it became clear that the plan did not necessarily involve the US buying BTC. However, with the latest daily close above key resistance trend lines, optimism was quickly returning. Popular trader and analyst Rekt Capital noted that Bitcoin only needs to rally an additional 8% to position itself for a reclaim of the range above and end the downside deviation. Given that BTC is up almost 13% since last week's lows, this target seems achievable.