Analysis: A multi-factor environment has emerged with positive net liquidity for the first time since early 2022

The cryptocurrency market research institution Delphi Digital stated on social media that the Federal Reserve's interest rate path for next year is the clearest it has been in years. A rate cut of 25 basis points is expected in December 2025, bringing the federal funds rate down to around 3.5%-3.75%. The forward curve predicts at least three more rate cuts in 2026, and if the path remains unchanged, the year-end rate will drop to around the lower end of 3%.

However, rate cuts are only part of the picture. Quantitative tightening (QT) ended on December 1. The Treasury General Account (TGA) is planned to gradually decrease rather than replenish. Overnight reverse repos (RRP) have been completely exhausted. These factors together have created the first positive net liquidity environment since early 2022.

The secured overnight financing rate (SOFR) and the federal funds rate have fallen back to the high range of 3%. Real interest rates have also retreated from their peaks in 2023-2024. However, there has not been a collapse; this is a controlled slowdown rather than a policy U-turn.

2026 will be a year when policy shifts from resistance to moderate support. This environment is favorable for long-duration assets, large-cap stocks, gold, and digital assets supported by structural demand.