Wall Street Banks Forecast Fed Rate Cuts Through 2026, Crypto Markets Watch for Liquidity Impact

Morgan Stanley and Citigroup now project at least 50bps of Federal Reserve rate cuts in 2026, with revised timelines suggesting deeper easing than previously expected. The potential shift comes as political pressures mount during the presidential transition period, with Treasury officials openly advocating for accommodative policy.

Market analysts highlight three consequential developments: First, Citigroup's updated forecast now includes 75bps of cuts across 2026, which WOULD push rates below 3%. Second, the timing of expected cuts has shifted from early-year projections to mid-2026 implementations. Third, these revisions coincide with ongoing liquidity rotations into alternative assets.

Digital asset markets appear positioned as beneficiaries of this macro pivot. Historical correlations suggest bitcoin and major altcoins like ETH and SOL typically outperform during easing cycles, particularly when real yields compress. The prospect of prolonged dollar weakness could further catalyze flows into crypto markets, with derivatives platforms on Binance and Bybit already showing elevated institutional open interest.