Analysis: Multiple Factors Contribute to the Market Experiencing its First Positive Net Liquidity Environment Since Early 2022

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 holds, rates will fall to around 3% by the end of the year.

However, rate cuts are just part of the story. Quantitative tightening (QT) ended on December 1st. The Treasury General Account (TGA) is planned to gradually draw down rather than refill. Overnight Reverse Repurchase Agreements (RRP) have been fully absorbed. These factors have together 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 end of the 3% range. Real rates have also retreated from their peak in 2023-2024. However, there has not been a collapse, but rather a controlled slowdown, indicating a deliberate policy pivot rather than a sudden U-turn.

2026 will be a year where policy shifts from headwinds to modest tailwinds. This environment favors long-duration assets, large-cap stocks, gold, and digital assets backed by structural demand.