Bitcoin BTC/USD Reaches $86,909.48, Gaining 1.03% as Crypto Markets Respond to Shifting Fed Policy Expectations

Bitcoin BTC/USD reached $86,909.48 on Monday, gaining 1.03% over 24 hours as cryptocurrency markets continue responding to shifting Federal Reserve monetary policy expectations.

portion of the article is a transcription of a post made by Hayes on X.

What Happened: BitMEX co-founder Arthur Hayes predicted on Sunday that Bitcoin will hit $110,000 before retesting the $76,500 level.

"I bet BTC hits $110k before it retests $76.5k," Hayes wrote.

He attributed this to the Federal Reserve shifting from quantitative tightening to quantitative easing for treasuries, and tariffs not mattering due to "transitory inflation."

"The Fed is going from QT to QE for treasuries. And tariffs don't matter cause 'transitory inflation.' JAYPOW told me so. I'll expound on that in my next essay, that's the TLDR for your TikTok peanut brain," he said.

The central bank kept interest rates steady at 4.25%-4.50% last Wednesday, with Chairman Jerome Powell bringing back the controversial term "transitory" to describe potential inflationary effects from new tariffs.

The Fed also announced plans to slow its quantitative tightening program beginning in April, cutting Treasury securities redemption limits from $25 billion to $5 billion monthly. This policy shift comes amid rising stagflation concerns.

The latest projections from the Fed show Gross Domestic Product growth slowing to 1.7% by 2025, compared to December's estimate of 2.1%, while core PCE inflation expectations rose from 2.5% to 2.8%.

"It’s simply too early to say with any degree of confidence that the inflationary effects will be transitory," criticized Allianz chief economic adviser Mohamed El-Erian, referring back to the Fed's 2022 blunder where they initially disregarded persistent inflation.

However, economists warned that despite President Biden's administration announcing new tariffs on Sunday on Chinese goods, economists believe they will have a minimal impact on inflation.

"The S&P 500 index, tracked by SPDR S&P 500 (NYSE:SPY), closed 0.08% higher on Friday after Jerome Powell, chairman of the Federal Reserve, said at the Economic Club of New York that the U.S. could enter a recession this year despite a strong jobs market, as the central bank attempts to cool inflation with higher interest rates," reported Benzinga.

The S&P 500 index, tracked by SPDR S&P 500 (NYSE:SPY), closed 0.08% higher on Friday after Jerome Powell, chairman of the Federal Reserve, said at the Economic Club of New York that the U.S. could enter a recession this year despite a strong jobs market, as the central bank attempts to cool inflation with higher interest rates.

After reaching a 22-month low last week, Bitcoin surged past $85,000. Meanwhile, gold extended its record highs and remained stable at $3,020 per ounce.