Experts are increasingly signaling a bullish trend in the crypto market for the first quarter (Q1) of 2026, supported by several co-occurring macro factors.
Analysts suggest that Bitcoin could soar to 300,000 to 600,000 USD if these factors materialize.
5 macroeconomic trends supporting a bullish market in Q1 2026
The convergence of five key trends is creating a situation that analysts call a 'perfect storm' for digital assets.
1. The Federal Reserve halts balance sheet reduction, alleviating pressure.
The Federal Reserve's stringent liquidity control measures (QT) that drained liquidity from the market throughout 2025 have just ended.
Simply stopping the withdrawal of liquidity from the market has historically had a positive effect on risk assets, and based on past economic data, Bitcoin could surge by up to 40% when the Fed stops reducing its balance sheet.
Analyst Benjamin Cowen indicates that early 2026 may be a period when the market begins to feel the aftershocks after the Fed ends its QT measures.
2. Interest rate cuts may return
The Federal Reserve has just lowered interest rates, with Goldman Sachs predicting further rate cuts in 2026, which may bring rates down to 3–3.25%.
Lower interest rates typically increase liquidity and stimulate demand for risk assets like cryptocurrencies.
3. Improved short-term liquidity
Accelerated purchases of short-term U.S. bonds or other supportive measures at the front end of the yield curve may help alleviate funding pressures and lower short-term interest rates, with the Fed indicating it will start buying short-term bonds to manage market liquidity technically.
[Purchases] aim to maintain reserve capital levels sufficiently, which will support effective control of policy interest rates... These issues are separate and do not affect the stance of monetary policy, said Fed Chair Jerome Powell.
The Fed enters the short-term money market periodically during liquidity imbalance, with this imbalance manifesting in the overnight repo market, where banks exchange bonds for short-term cash.
Recently, several factors indicate increasing short-term funding pressures, including:
Money market funds hold cash at higher levels,
The decline in short-term U.S. government bond (T-bill) issuance, as the Treasury adjusts its borrowing mix, and
Increased seasonal liquidity demand
The Federal Reserve has begun a controlled plan to repurchase short-term government bonds to prevent short-term interest rates from deviating from the Fed's target interest rate, with these bonds being the shortest-dated government securities, usually having maturities of a few weeks to one year.
Even though this measure is not classic quantitative easing (QE), it could also become a significant liquidity boost for the crypto market.
For Q1 2026, the overall impact on risk asset markets, such as crypto and stocks, is generally considered positive but not substantial, as the Fed adjusts its policy towards gradually maintaining or expanding liquidity.
4. Political incentives promote stability
As the U.S. midterm elections are scheduled for November 2026, policymakers tend to prioritize market stability over turmoil.
This environment helps reduce the risk of sudden regulatory shocks and enhances investor confidence in risk assets.
If the U.S. stock market shakes before the midterm elections, the current U.S. government will be questioned, as they will do everything possible to keep the stock market (and crypto) going, said Thorsten Froehlich, a macro researcher.
5. The mystery of employment
Weak U.S. labor market figures, such as declining employment or moderate layoffs, often lead to a more relaxed stance from the Fed.
A weakening labor market will further increase pressure on the Fed to ease policies, which indirectly creates more liquidity and conditions favorable for crypto.
Expert views indicate an increasing bullish trend.
Observers in the field agree on the macro perspective; Alice Liu, head of research at CoinMarketCap, predicts that the crypto market will thrive again in February and March 2026, citing a combination of positive macro factors.
We will see a market recovery in the first quarter of 2026, with February and March returning to be a bullish market again, based on a combination of macro indicators, Binance reports, citing Alice Liu, head of research at CoinMarketCap.
While some analysts are becoming more optimistic, crypto analyst Vibes predicts that Bitcoin could reach between 300,000 and 600,000 USD in the first quarter of 2026, reflecting a strongly positive outlook amid improved liquidity and easing macro conditions.
Currently, market participants remain cautious, as the open interest volume of Bitcoin has decreased, reflecting traders' wariness.
However, if the momentum from these macro factors materializes, accumulation may quickly turn into a sharp rise, opening a historical chapter for the crypto market in early 2026.
