Crypto Morning: Bitcoin Surges Amid Looser Financial Conditions; Analyst Predicts New All-Time High in Q2

U.S. Dollar Sees Third-Largest Three-Day Drop Since 2015 as Treasury Yields Plunge

Bitcoin (BTC) soared past $86,800 on Wednesday (20), surging nearly 5% as investors reacted to signs of looser financial conditions from the Federal Reserve and growing optimism for a liquidity-driven rally.

At the time of writing, Bitcoin was up 2%, trading at $85,179, according to the Bitcoin Price Index (BPI), which priced the asset at R$483,046. Ethereum (ETH) remained relatively stable, inching up 0.2% to $1,983.

Most major cryptocurrencies followed suit with notable gains. XRP surged 7.5%, trading at $2.48, while Solana (SOL) climbed 3.3% to $130. BNB (+2.8%), Cardano (+1.1%), and Dogecoin (+2%) also posted solid performances.

Tron (TRX) was the only outlier, dipping 0.2% to $0.2295.

Fed’s Policy Shift Spurs Market Optimism

The Federal Reserve announced it would slow the reduction of its $6.8 trillion balance sheet, capping the runoff of Treasury securities at $5 billion per month—down from the previous $25 billion limit. This move aims to prevent disruptions in funding markets amid ongoing debt ceiling tensions.

The central bank also held interest rates steady at 4.25%–4.5%, reaffirming its projection of two rate cuts later this year, despite lingering inflation concerns.

Easier financial conditions appear to be fueling risk appetite. The U.S. dollar recorded its third-largest three-day decline since 2015, while Treasury yields and bond market volatility dropped significantly.

Bitcoin’s Bullish Outlook: New Highs Ahead?

Jamie Coutts, a leading crypto analyst at Real Vision, suggested that these macroeconomic shifts could set the stage for a major Bitcoin rally over the next 90 days.

“Historically, these indicators have preceded significant Bitcoin moves,” said Coutts.

“With the People’s Bank of China ramping up liquidity measures, the market may be underestimating how quickly Bitcoin can skyrocket—potentially hitting new all-time highs before the end of Q2—despite ongoing concerns over Trump-era tariffs and the risk of a recession,” he added.

Global Liquidity and the Crypto Market

The People’s Bank of China has injected additional liquidity into its financial system in recent weeks, reinforcing a broader global trend of easing that could benefit risk assets. At the same time, the Federal Reserve’s decision to slow quantitative tightening aligns with market sentiment that tightening cycles may be nearing their end.

Crypto traders have seized on these developments, pushing Bitcoin higher alongside gains in equities and the tech sector.

What Lies Ahead?

Uncertainties persist. Inflation, geopolitical risks, and potential shifts in fiscal policy under a Trump administration could alter the Fed’s trajectory.

For now, however, traders are betting that liquidity will remain abundant—contrary to earlier expectations. If that remains the case, Bitcoin’s bull run might just be getting started.