The Federal Reserve's shift in monetary policy is quietly beginning, and the logic of the crypto market has fundamentally changed.
As a veteran who has been navigating the crypto market for many years, I am increasingly aware that the market in 2026 will be unlike any previous year. The market fluctuations over the past few months have left many people anxious, but to me, this is precisely a sign of the market's maturity.
The current era is no longer one where prices can be driven solely by memes and community sentiment. Federal Reserve policies, institutional capital flows, and practical application scenarios are becoming more crucial factors determining market direction.
1 Monetary policy is shifting, and the liquidity gates are about to loosen.
The recent market atmosphere is suffocating—Bitcoin has fallen more than 27% from its year-to-date high, and a lot of leverage has been washed out in a short time. However, this apparent weakness precisely masks the fundamental shift in monetary policy that is occurring.
The Federal Reserve still emphasizes its determination to combat inflation, but its actions have betrayed its real dilemma: the banking system lacks money, the government faces immense pressure to issue debt, and economic data is showing cracks.
Michael Hartnett, Chief Investment Strategist at Bank of America, predicts that the Federal Reserve may once again 'surrender' to policy pressures in 2026 and be forced to start a rate-cutting cycle. This means that the liquidity environment will undergo a fundamental shift.
The CME 'Fed Watch' tool shows that market expectations for rate cuts are fluctuating wildly, and this uncertainty itself is a sign that the market is about to change direction.
Kevin Hassett, the director of the National Economic Council at the White House, has become the top candidate for the next chairman of the Federal Reserve, which is a critically important signal. Hassett is a confidant of Trump and has publicly stated that if he were to serve as the chairman of the Federal Reserve, he would 'immediately cut interest rates.' This means that after Powell's departure in May 2026, Federal Reserve policy may completely shift to a dovish stance.
2 Market structure is undergoing a qualitative change, driven by practicality and value.
2025 will be a turning point year for the digital asset industry, with Bitcoin setting a historical high, but more importantly, the industry is shifting from speculation-driven to utility-value-driven.
CoinShares has explicitly stated in its 77-page report (2026 Outlook: The Year of Utility Winning) that digital assets are no longer trying to establish a parallel financial system but are enhancing and modernizing the existing traditional financial system.
Hybrid Finance is on the rise: the stablecoin market has exceeded $300 billion, and the total value of tokenized real-world assets (RWA) has increased from $15 billion at the beginning of 2025 to $35 billion.
An increasing number of protocols are beginning to generate real income and distribute it to token holders, marking the transition of tokens from purely speculative assets to equity-like assets.
3 The political landscape is changing, and the regulatory framework is becoming increasingly clear.
Trump's support for cryptocurrencies after taking office has exceeded everyone's expectations: from nominating Paul Atkins, a supporter of cryptocurrencies, as SEC Chairman, to signing a bill to establish a strategic Bitcoin reserve, political resistance is turning into momentum.
The Trump administration plans to acquire up to 200,000 Bitcoins annually for the next five years, potentially reaching a total of 1 million, about 5% of the total Bitcoin supply. This national-level buying plan will provide unprecedented bottom support for the market.
The regulatory framework is also accelerating its implementation. The U.S. has passed the GENIUS Act requiring stablecoin issuers to hold U.S. Treasury reserves, the EU has implemented the MiCA framework, and Asia is forming a more coherent regulatory group. The clarity of regulation has cleared the last obstacles for institutional large-scale entry.
4 Analysis of three possible scenarios for 2026.
Based on the current macro environment and technical analysis, I believe that the following three scenarios may occur in 2026:
Optimistic scenario (30% probability): The economy achieves a soft landing, productivity increases, and the Federal Reserve successfully cuts interest rates. Bitcoin may break through $150,000, and utility projects will shine.
Baseline scenario (50% probability): The economy slowly expands, and the Federal Reserve cautiously cuts interest rates. Bitcoin fluctuates in the $110,000-$140,000 range, with structural opportunities concentrated in Bitcoin Layer 2 and RWA tokenization.
Bear market scenario (20% probability): The economy falls into recession or stagflation, and Federal Reserve policy is constrained. Bitcoin may drop to the $70,000-$100,000 range, but projects with strong utility will show resilience.
Even in this relatively pessimistic scenario, due to the Trump administration's Bitcoin reserve plan providing bottom-buying support, it will be difficult for Bitcoin to return to the previous bear market lows.
5 My personal strategy and operational plan.
To survive in this market, I have always adhered to a principle: be greedy when the market is fearful and be fearful when the market is greedy. The current market sentiment is at a rare low not seen in nearly a decade, which itself is an important signal.
My specific operational plan is as follows:
Regarding entry timing: I will start to gradually accumulate BTC, ETH, BNB, and other mainstream assets after the Bank of Japan raises interest rates this month. Market volatility will increase during the Federal Reserve's policy shift, and gradually buying in is the best way to control risk.
Regarding asset selection: I prioritize tokens with real income capabilities and cash flow distribution mechanisms. Hyperliquid uses 99% of its income for daily token buybacks, and Uniswap and Lido have also launched similar mechanisms. These assets with real value support will be my first choice.
On position management: I mainly use spot or leverage up to 2 times, and I never use high leverage. After the confirmation of the Federal Reserve's rate-cutting cycle, I will consider increasing the allocation ratio for mid-cap projects that are sensitive to financing costs, which may show stronger profitability after a rate cut.
I plan to hold a core position until around April-May 2026, before and after Powell's departure, when the market may experience a phase peak due to the realization of expectations. That will be the time for profit-taking or adjusting position structures.
The next 12-18 months will be a critical stage for the crypto market, moving from adolescence to maturity. The Federal Reserve's policy shift provides liquidity support, while the rise of practicality offers an intrinsic value foundation for the market.
2026 may not see a bull market as wildly comprehensive as in 2021, but structural opportunities will far exceed previous levels. For projects with real utility, generating cash flow, and solving real problems, their spring has only just begun.
All of this will gradually unfold under the faucet that the Federal Reserve has quietly turned on. Follow Xiang Ge for more first-hand information and precise points of knowledge about the crypto circle. Learning is your greatest wealth!
