2026 Fed cuts could revive retail crypto demand – analyst says

On Tuesday, Owen Lau, managing director at Clear Street, described the pace of Federal Reserve rate cuts in 2026 as a key factor in whether retail investors return to cryptocurrencies. He said: “Retail will be more excited to get into crypto, institutions will be more excited to get into crypto.”

Lower rates have tended to support digital assets by reducing the appeal of yield-bearing alternatives such as bonds and deposits, prompting some investors to seek higher returns in assets like Bitcoin.

Minutes from the Fed’s December meeting, released Tuesday, stated: “The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.”

Prediction platform data pointed to uncertainty on timing. Polymarket showed a 15% probability of a rate cut in January and a 52% chance of a cut in March.

The Fed delivered three 25-basis-point reductions in 2025-in September, October and December. The December minutes indicated participants were divided over whether the final cut was warranted.

Bitcoin’s response has been volatile. Following the first cut, the token reached a record $125,100 on Oct. 5 before a large liquidation event on Oct. 10 erased about $19 billion in leveraged positions.

As we covered previously, on Dec. 15, 2025, Grayscale Investments released its 2026 outlook, forecasting Bitcoin could set a new all‑time high in the first half of 2026. The firm linked the call to continued institutional demand and a friendlier U.S. policy backdrop, citing rising public‑sector debt and inflation risks as drivers of portfolio demand for Bitcoin and Ether.