7 Reasons the Fed Could Trigger a Spike in Bitcoin (BTC) Price: Crypto Market Latest Analysis

Jakarta, Pintu News – The global cryptocurrency market is back in the spotlight after market analysts warned that a crisis of confidence in US Federal Reserve(Fed) policy could create conditions that trigger a surge in Bitcoin (BTC) prices. This scenario arises from a combination of macroeconomic factors, global liquidity, and changes in investor behavior that increasingly seek alternative assets as hedges against monetary risk. Here are seven key reasons that crypto investors need to understand in this context.

1. Fed Policy Uncertainty Increases

The Fed’s questionable monetary policy is creating great uncertainty in the financial markets. The US central bank’s interest rate-setting and market intervention measures are in the spotlight as they have far-reaching effects on both traditional and digital assets. This uncertainty has prompted investors to seek alternative assets such as Bitcoin for portfolio diversification.

Unexpected changes in interest rate policy can affect the expected yields of government securities, making riskier assets such as stocks less attractive. In this context, cryptocurrencies like BTC are seen as having the potential to attract capital from investors looking to hedge against monetary policy. Demand for Bitcoin often increases when global risk sentiment worsens, resulting in strong buying pressure.

In addition, policy uncertainty often shortens the short- and medium-term investment horizon, prompting investors to consider more liquid and transparent assets such as Bitcoin with its decentralized system.

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2. Global Liquidity Declines

The Fed’s tightening of monetary policy tends to reduce global liquidity, which means capital in circulation becomes tighter. When liquidity falls, investors tend to shift their capital from high-risk assets to assets with stronger perceived hedges. Bitcoin, although volatile, is often categorized as an alternative asset with high liquidity within the crypto market.

A decrease in liquidity in the global market can also magnify Bitcoin price movements if selling pressure decreases while demand rises. This creates high volatility that can accelerate price trends both up and down depending on investor sentiment.

In addition, when traditional capital flows out of the stock or bond markets due to monetary policy, some of that capital flow could head towards the crypto market, amplifying short-term price dynamics.

3. Bitcoin’s Position as an Alternative Asset

Bitcoin is increasingly seen as an alternative asset to gold and other instruments such as Tether Gold (XAUt) or stablecoins. As confidence in the conventional financial system declines, Bitcoin is often an option for investors looking for a hedging mechanism against inflation or a decline in the value of fiat currencies.

This perception gets stronger when macroeconomic data shows continued uncertainty. Bitcoin, with its decentralized nature and limited supply, is often seen as having similar characteristics to digital gold.

The demand for Bitcoin as an alternative asset increases capital inflows into the crypto market especially amidst the volatility of traditional markets. Large investors also often utilize the negative correlation between risk assets and Bitcoin in their asset allocation planning.

4. Institutional Funds Flow Into Crypto

The inflow of institutional capital into the cryptocurrency market has been increasing in recent years through structured investment products such as Bitcoin ETFs, crypto funds or institutional portfolio allocations. As traditional markets face pressure, institutional fund flows into Bitcoin may increase as part of a diversification strategy.

This institutional demand provides additional support to Bitcoin’s price, especially when large investors see a more stable opportunity than declining returns in other markets. These capital inflows are a fundamental signal for long-term price stability and growth.

In addition, the presence of institutional capital often attracts the participation of retail investors who see similar trends. The combined impact of institutional and retail capital can reinforce the upward price trend simultaneously.

5. Crypto Trading Volume Increases

Trading volumes in Bitcoin and other cryptocurrencies tend to increase when investors respond to major shifts in global markets. When traders see a surge in demand or high volatility, trading activity usually increases significantly.

This increase in trading volume is one of the technical indicators that the price trend is being strengthened. A spike in volume also indicates that more market participants are involved in a particular price direction, which often means the strength of the trend may continue in the short term.

In the context of Bitcoin, strong trading volume can help the price to break through important technical levels, while creating momentum that is increasingly difficult for market algorithms and active traders to ignore.

6. Crypto Market Sentiment Changes

Market sentiment is one of the key drivers in crypto price movements. When sentiment changes from neutral to positive due to hedging or asset protection expectations, demand for Bitcoin can surge. This change in sentiment is often triggered by policy news, macroeconomic data, or large capital inflows.

Sustained positive sentiment can attract new capital flows from both long-term and short-term investors. As global risk perception increases, so does the appeal of cryptocurrencies as an investment alternative.

This change in sentiment is also often measured through social indicators, search volume for crypto assets, as well as on-chain data showing accumulation by large wallets or whales.

7. Correlation with Traditional Assets

The correlation between Bitcoin and traditional assets such as stock indices or precious metals changes frequently depending on global economic conditions. In some phases, Bitcoin moves in the same direction as the stock market, while in others, it shows a negative correlation as an alternative asset.

When traditional markets weaken due to monetary policy threats, capital flows towards Bitcoin may increase. This makes Bitcoin not just a speculative asset, but also a portfolio risk diversification tool when traditional assets face pressure.

Investors need to understand these dynamics to realistically assess how Bitcoin reacts to macro conditions.

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*Disclaimer

This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Crypto trading activities are subject to high risk and volatility, always do your own research and use cold hard cash before investing. All activities of buying andselling Bitcoin and other crypto asset investments are the responsibility of the reader.

Reference

• Jamie Redman/Bitcoin.com News. Is Fed Crisis Setting Bitcoin Up for Major Price Surge? Accessed January 16, 2026.