Morgan Stanley forecasts that the U.S. Federal Reserve will cut interest rates seven times by the end of 2026, a prediction that could significantly impact financial markets, including cryptocurrencies.
Rate Cuts Delayed
Initially, the expectation was that the Fed would start lowering rates as early as this summer. However, according to new projections from Morgan Stanley, the first cut is likely to occur in March 2026. The primary reason for this shift is inflation related to recent tariff announcements. Michael Gapen, U.S. Chief Economist at Morgan Stanley, stated:
> “The recent tariff announcement boosts the risk of rising inflation, particularly over the next three to six months... Tariff-induced inflation will keep the Fed on the sidelines.”
Impact on Crypto
As interest rates fall, borrowing becomes cheaper, and liquidity improves, prompting investors to seek higher-yield assets. Historically, such environments have fueled growth in riskier markets, including cryptocurrencies. If Morgan Stanley's forecast holds, it could provide new investment opportunities in cryptocurrencies like Bitcoin, which emerged during a low-rate environment following the 2008 financial crisis.
Current Status of Bitcoin
Currently, Bitcoin is trading at $106,476, with a market cap of $2.12 trillion and a 24-hour gain of 0.70%. It dominates 64.57% of the entire cryptocurrency market. While the current price action appears normal, investor sentiment is gradually improving, especially with potential rate cuts and increasing interest in Bitcoin ETFs.
In conclusion, Morgan Stanley's predictions regarding interest rate cuts could significantly influence the cryptocurrency market and spark new investment trends. The anticipation of these changes fuels interest in assets such as Bitcoin and other altcoins.
