Major Wall Street institutions, Morgan Stanley and Citigroup, have revised their forecasts to predict more aggressive interest rate cuts by the Federal Reserve in 2026, a development viewed as highly supportive for risk assets like cryptocurrencies.
Morgan Stanley now expects two 25-basis-point (bps) cuts, shifting its projected timing from January and April to June and September of 2026. Citigroup has taken an even more dovish stance, forecasting three 25-bps cuts in March, July, and September, totaling 75 bps of easing. This would push the federal funds rate range below 3%, into a neutral territory of roughly 2.75% to 3.25%.
The revised outlook is driven by a combination of weaker-than-expected economic data, particularly in jobs growth, and the impending change in Federal Reserve leadership. President Donald Trump is expected to nominate a new Fed Chair to replace Jerome Powell, with Wall Street anticipating the appointee will be more receptive to lowering rates. Treasury Secretary Scott Bessent has also emphasized the need for lower interest rates to spur economic growth.
These forecasts align with a broader Wall Street consensus, including Goldman Sachs, Bank of America, Wells Fargo, and Barclays, which are also projecting at least 50 bps of cuts in 2026.
The analysis points to a profoundly positive impact on Bitcoin and the broader crypto market. The expected rate cuts coincide with ongoing liquidity injections, including the Fed's Quantitative Easing (QE) program that began in December 2025 and a planned $200 billion stimulus for the housing industry. This dovish monetary policy is expected to put Wall Street investors into a "risk-on" mode, potentially triggering capital rotation from precious metals and fueling a strong bull run for Bitcoin and altcoins in 2026.
