BlockBeats News, December 4th, Cryptocurrency market research firm Delphi Digital posted on social media that the Fed’s interest rate path next year is the clearest in years. A 25 basis point rate cut is expected in December 2025, bringing the federal funds rate to around 3.5%-3.75%. The forward curve predicts at least three more rate cuts in 2026, and if the path remains unchanged, rates are expected to drop to around 3% by the end of the year.
However, rate cuts are only part of the story. Quantitative tightening (QT) ended on December 1st. The gradual reduction, not replenishment, of the Treasury General Account (TGA) is underway. Overnight reverse repo (RRP) has been fully utilized. These factors have collectively created the first net positive liquidity environment since early 2022.
The Secured Overnight Financing Rate (SOFR) and the Federal Funds Rate have fallen back to the high 3% range. Real rates have also retraced from their peak in 2023-2024. However, there has been no collapse, but rather a controlled deceleration, indicating a deliberate slowdown rather than a policy U-turn.
2026 will be a year where policy shifts from resistance to gentle tailwinds. This environment favors long-duration assets, large-cap stocks, gold, and digital assets supported by structural demand.
