Delphi Digital: Multifactorialism has long been a market phenomenon since the beginning of 2022, marking the first instance of a positive net liquidity environment.

December 4: Cryptocurrency market research firm Delphi Digital took to social media to note that the Federal Reserve’s interest rate path for next year is the clearest it’s been in years. A 25-basis-point rate cut is anticipated in December 2025, bringing the federal funds rate to roughly 3.5%-3.75%. The forward curve points to at least three additional rate cuts in 2026, with rates expected to fall to around 3% by year-end. But rate cuts are only part of the picture. Quantitative tightening (QT) wrapped up on December 1. The Treasury General Account (TGA) is set to draw down gradually instead of being replenished, and overnight reverse repo (RRP) facilities have been fully drained. Together, these factors have created the first liquidity-positive environment since early 2022. The Secured Overnight Financing Rate (SOFR) and federal funds rate have fallen to the upper end of the 3% range. Real interest rates have also declined from their 2023-2024 peaks—but this has been a controlled easing, not a collapse, signaling a deliberate tapering rather than a policy U-turn. 2026 is shaping up to be a year where policy shifts from a headwind to a mild tailwind. This environment is favorable for long-duration assets, large-cap equities, gold, and digital assets supported by structural demand.