Hey guys, back again with a calculation for you guys. I enjoy doing these like my bear case Ethereum calculation last time. ( Which I Still think is severely undervalued)
Today we will be looking at the possible outcome of the quantitative easing the Federal Reserve will be doing in 2026 and its outcome to BTC.
Here is the model we will be using The liquidity-driven return function:
P(t) = Po [ 1 + β ( 3.1 ΔBS/ΔBSo + 1.6Δr ) ]
Po = current price (e.g., 90K BTC) β = Bitcoin’s liquidity beta ΔBS = increase in Fed balance sheet (QE) ΔBSo = current Fed balance sheet (≈ $10T) Δr = total Fed rate cutsThe coefficients (These values are based on post-GFC QE cycles, 2019 mini-QE, and 2020 QE.):
3.1 → observed from Fed balance sheet growth (Derived from data of https://fred.stlouisfed.org/) 1.6 → observed from previous rate cuts (Derived from data of https://fred.stlouisfed.org/)If this is TLDR or you’re just regarded. Here is an easier version of the model.
Crypto Price=Today’s Price×(1+Money Boost)
I made some different calculations for myself. A bear, base and bull. But for Reddit I’ll just do the base case as I don’t want to be that prediction guy.
For the base case in 2026 these are the following variables.
Δr = 1.0% of total cuts in the year. (estimated 4 times 100bp cuts) ΔBS = $700B (We take the median of the historically added increases: $600B (QE1), $850B (QE2), $1.2T (QE3), $3.2T (COVID QE), $400B (2019 “QE-not-QE”) ) $6.640 Trillion (reference: https://fred.stlouisfed.org/series/WALCL)These input variables inside the model even out the function to an outcome of:
$213KI feel like Bitmine (Tom Lee) isn’t too far off with his BTC prediction too be honest.
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You might also be interested in reading The Fed Plans to Unveil Digital Dollar Prototypes in July.