Key Takeaways
- •The December Fed rate cut lowers the funds rate to approximately 3.5–3.75%, indicating at least three more cuts are anticipated in 2026.
- •The cessation of quantitative tightening (QT), a drawdown of the Treasury General Account (TGA), and the depletion of the Reverse Repurchase Program (RRP) are creating the first net-positive liquidity environment since 2022.
- •Crypto and other assets sensitive to duration are poised to benefit as monetary policy shifts from being a headwind to a mild tailwind.
Fed Rate Cuts Could Boost Crypto in 2026
Delphi Digital analysts suggest that the Federal Reserve's recent 25 basis-point rate cut in December, which brought the federal funds rate to roughly 3.50–3.75%, may foster a more favorable environment for cryptocurrencies in 2026. The forward curve currently prices in at least three additional rate cuts through the year, potentially bringing rates into the low 3% range by year-end.
Could rate cuts be a key tailwind for crypto in 2026?
The Fed’s rate path heading into next year is the clearest it’s been in years. December 2025 delivers another 25bp cut, taking fed funds to roughly 3.5-3.75%. The forward curve prices at least 3 more cuts through 2026,… pic.twitter.com/ysFcp3zWOF
— Delphi Digital (@Delphi_Digital) December 4, 2025
This projected shift in monetary policy, coupled with the end of quantitative tightening (QT) on December 1, a planned drawdown of the Treasury General Account (TGA), and the depletion of the Reverse Repurchase Program (RRP), is creating the first net-positive liquidity backdrop since early 2022. Analysts highlight that this transition signifies monetary policy moving from a headwind to a mild tailwind for risk assets, including digital currencies.
Liquidity Boost and Controlled Policy Descent
Short-term bank funding rates, such as SOFR and fed funds, have begun to drift toward the high 3% range. Concurrently, real interest rates have declined from their peaks observed in 2023–2024. Delphi Digital characterizes the current monetary policy environment as a controlled descent, rather than an abrupt pivot, which helps to mitigate the risk of market shocks. This anticipated increase in liquidity and the easing of financial conditions could incentivize both institutional and retail investors to increase their exposure to the cryptocurrency market.
Assets that exhibit strong structural demand, including Bitcoin, major altcoins, and digital products that are sensitive to duration, are expected to be among the first to experience these positive effects. The combination of predictable monetary policy and renewed liquidity is likely to accelerate adoption and trading activity across the broader crypto ecosystem.
With clear guidance from the Federal Reserve and a supportive liquidity environment, 2026 has the potential to represent a significant turning point for digital assets. This period could reverse the challenging headwinds faced in recent years and provide a fresh tailwind for cryptocurrencies.
Following statements from Federal Reserve officials, Bitcoin (BTC) is showing early indications of stabilization. A report from QCP Asia indicates that traders are now pricing in a approximately 75% probability of a rate cut in the upcoming month, a notable increase from the 30–40% probability observed just the previous Thursday. This shift suggests a potential macroeconomic tailwind for the leading cryptocurrency, reinforcing the outlook for a stronger year in 2026 for digital assets.