Dollar Liquidity Shifts From Headwind To Tailwind For Risk Assets, Delphi Digital Says

Global dollar liquidity has shifted from a structural headwind to a marginal tailwind for risk assets for the first time since early 2022, according to Delphi Digital. The crypto research firm identifies 2026 as the key inflection point for digital assets as monetary conditions ease.

What Happened: Liquidity Turns Positive

The Federal Reserve's rate trajectory heading into next year has reached its clearest point in years, Delphi Digital said in a macro analysis thread on X. Futures markets indicate another 25-basis-point cut by Dec. 2025, which would bring the federal funds rate to roughly 3.5% to 3.75%.

The forward curve prices at least three additional cuts through 2026, potentially pushing rates into the low 3% range by year's end if the path holds.

Short-term benchmarks have already adjusted to the new environment.

SOFR and fed funds have drifted toward the high 3% range, while real rates have rolled over from their 2023-2024 peaks, according to the firm. The firm characterized the movement as a controlled descent rather than a pivot, noting that nothing has collapsed.

The more significant shift involves the liquidity infrastructure itself. Quantitative tightening ends on Dec. 1, the Treasury General Account is set to draw down rather than refill, and the Reverse Repo Facility has been fully depleted, Delphi Digital wrote. These factors combine to create the first net positive liquidity environment since early 2022.

Also Read: Liquidity Surge And December Fed Cut Expectations Put Bitcoin At Critical Crossroads: Analysts

Why It Matters: Policy Buffer Gone

The Fed's liquidity buffer has disappeared entirely. Reverse Repo balances collapsed from over $2 trillion at the peak to practically zero, the firm stated in a follow-up post. In 2023, a swollen RRP allowed the Treasury to refill its General Account without directly draining bank reserves because money-market funds could absorb issuance out of the RRP.

With the RRP now at the floor, that buffer no longer exists.

Any future Treasury issuance or TGA rebuild must come directly from bank reserves, forcing a policy choice for the central bank.

The Fed faces two options: let reserves drift lower and risk another repo spike, or expand the balance sheet to provide liquidity directly, Delphi Digital noted. Given how badly 2019 went, the second path appears far more likely.

The firm frames 2026 as the pivotal year when policy stops being a headwind and becomes a mild tailwind. That shift would favor duration, large caps, gold and digital assets with structural demand behind them, rather than triggering an immediate price spike.