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Analysis: Multiple Factors Lead to First Positive Net Liquidity Environment in the Market Since Early 2022
Summary: According to reports, the cryptocurrency market research firm Delphi Digital posted on social media that the Fed's interest rate path for 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 ...
According to reports, the cryptocurrency market research firm Delphi Digital posted on social media that the Fed's interest rate path for 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, with rates expected to fall to around 3% by the end of the year.
However, rate cuts are just one part of the equation. Quantitative tightening (QT) ended on December 1st. The Treasury General Account (TGA) is planning to gradually reduce rather than replenish. Overnight reverse repurchase agreements (RRP) have been fully exhausted. These factors have collectively led to the first positive net liquidity environment in the market since early 2022.
The Secured Overnight Financing Rate (SOFR) and the federal funds rate have fallen to the high 3% range. Real interest rates have also declined from their peak in 2023-2024. However, this decline has been controlled and gradual, rather than a sudden policy reversal.
2026 is expected to be a year where policy shifts from resistance to mild support. This environment is favorable for long-duration assets, large-cap stocks, gold, and digital assets supported by structural demand.
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Link: Analysis: Multiple Factors Lead to First Positive Net Liquidity Environment in the Market Since Early 2022 [Copy]
