Why Bitcoin Underperformed in 2025: The “Strong Dollar” Problem
Hayes explains Bitcoin’s sluggish performance last year with one key factor: Federal Reserve Quantitative Tightening (QT). As the Fed reduced its balance sheet and drained liquidity, dollars became scarce. In that environment, capital moved away from high-risk assets. While stocks and gold held up, Bitcoinstill considered risky by traditional investorssuffered.
The 2026 Shift: Fed Liquidity as the True Catalyst
According to Hayes, the tide is about to turn. To support the economy, the Fed will eventually be forced to end QT and resume liquidity injections by expanding its balance sheet. That shift could ignite a powerful Bitcoin rally through several channels:
Cheaper Money: A growing money supply lowers borrowing costs.
Hunt for Returns: Institutions flush with cheap capital will seek higher-yielding assets.
Capital Rotation into Crypto: Some of that liquidity will flow into Bitcoin—a scarce, fixed-supply asset that has lagged other markets. This move would be driven by macro forces, not hype.
What Needs to Fall Into Place
For this scenario to play out, several conditions must align:
A clear Fed pivot toward monetary easing
Increased bank lending to amplify liquidity
Capital rotating out of crowded trades (such as AI stocks) and into undervalued BTC
Key Risks
Hayes also outlines what could derail the thesis:
A resurgence of inflation that prevents the Fed from easing
A major macroeconomic shock triggering risk-off behavior
Traditional markets absorbing most of the new liquidity
The Takeaway
Hayes’ message is straightforward: crypto doesn’t exist in isolation. It’s part of the global financial system. When the money printer turns back on, the hardest and most digital assets like Bitcoin, tend to move first and fastest.
What’s your take? Will Bitcoin’s 2026 fate be shaped more by the Fed than by halvings or ETF inflows? Share your thoughts below.
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