5 reasons that could trigger the biggest cryptocurrency rally ever in Q1 2026

Signs of a strong cryptocurrency market rally in Q1/2026 are becoming increasingly clear, as experts continuously emphasize the convergence of many favorable macroeconomic factors.

According to analysts, if these drivers truly come into effect, Bitcoin could break through the $300,000–$600,000 threshold, opening a historic chapter for the cryptocurrency market.

Five macro trends creating a “perfect storm” for the cryptocurrency market

The Fed temporarily pauses balance sheet reduction, removing liquidity barriers

After a year of quantitative tightening (QT) in 2025, which drained market liquidity, the U.S. Federal Reserve (Fed) has officially ended this policy. History shows that as soon as the Fed stops reducing liquidity, risky assets like Bitcoin tend to surge. Data from previous cycles recorded increases of up to 40% when the central bank halted balance sheet shrinkage.

Expert Benjamin Cowen predicts that early 2026 will be when the market clearly feels the positive impact of the Fed ending QT.

Interest rates are likely to continue decreasing

The Fed recently took steps to cut interest rates, and Goldman Sachs forecasts suggest that the downward trend could persist through 2026, with a target range of 3%–3.25%.

Lower interest rates typically stimulate liquidity, encouraging capital flows into speculative assets like cryptocurrencies.

Short-term liquidity has improved significantly

The Fed’s increased purchases of short-term Treasury bonds aim to stabilize the financial market, reduce funding pressures, and control short-term interest rates. Fed Chair Jerome Powell affirmed that these purchases are solely to ensure ample reserves and do not affect the monetary policy direction.

The Fed usually intervenes when liquidity imbalances appear in the short-term funding markets, especially in overnight repo markets. Recently, several signs indicated rising short-term funding pressures, such as:

In response, the Fed has implemented a plan to buy short-term Treasury bonds to keep interest rates within the targeted range. Although not traditional quantitative easing, this move still injects new liquidity into the crypto market.

The schedule of periodic T-bill purchases conducted by the New York Fed | Source: XWIN Research and Asset Management Overall, the Fed’s policy to maintain or expand liquidity in Q1/2026 will create a positive environment, although the growth rate of risky assets like cryptocurrencies and stocks is expected to be moderate.

( Political momentum toward stability

In 2026, the U.S. will enter a crucial midterm election cycle, prompting policymakers to prioritize market stability over abrupt changes. This helps reduce the risk of regulatory shocks and reinforces investor confidence in risky assets.

Macro researcher Thorsten Froehlich comments: “If the U.S. stock market weakens ahead of the midterms, the current administration will be held responsible – so they will do everything possible to maintain stability in the stock and crypto markets.”

) The “paradox” of the labor market

Weakening labor data, such as low employment rates or slight increases in layoffs, often lead the Fed to adopt more dovish policies. This indirectly boosts liquidity and creates favorable conditions for the cryptocurrency market.

Optimistic sentiment spreading among industry experts

Industry professionals generally agree on this positive outlook. Alice Liu, Head of Research at CoinMarketCap, forecasts that the cryptocurrency market will recover strongly in February and March 2026, based on a combination of favorable macro indicators.

“We will see the market return in Q1/2026. February and March will be periods of strong growth, driven by macroeconomic indicators,” Alice Liu shared with Binance.

Some analysts are even more optimistic. Commentator Vibes predicts Bitcoin could reach $300,000–$600,000 within Q1/2026, reflecting extremely positive sentiment amid improving liquidity and favorable macro factors.

Currently, market participation remains cautious, as evidenced by declining open interest in Bitcoin contracts and trader sentiment. However, if the aforementioned macro factors all come into play, the accumulation phase will quickly give way to a breakout rally, marking a historic start for the cryptocurrency market in 2026.