Analysis: Multiple factors have led to the first positive net liquidity environment in the market since early 2022.

On December 4, crypto market research firm Delphi Digital stated on social media that the Fed’s rate path for next year is the clearest it has been in years. A further 25 basis point rate cut in December 2025 will bring the federal funds rate down to around 3.5%-3.75%. The forward curve forecasts at least three more rate cuts in 2026, which, if the path remains unchanged, will bring the year-end rate down to the lower 3% range. However, rate cuts are only part of the story. Quantitative tightening (QT) ended on December 1. The Treasury General Account (TGA) plans to gradually reduce rather than replenish funds. The overnight reverse repo (RRP) facility has been completely depleted. Together, these factors have created the first net positive liquidity environment since early 2022. The Secured Overnight Financing Rate (SOFR) and the federal funds rate have both fallen back to the upper 3% range. Real interest rates have also retreated from their 2023-2024 peaks. However, there has not been a dramatic collapse—this is a controlled slowdown, not a sudden policy pivot. 2026 will be a year in which policy shifts from a headwind to a mild tailwind. This environment is favorable for long-duration assets, large-cap stocks, gold, and digital assets supported by structural demand.