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Morgan Stanley Predicts 7 Fed Rate Cuts by 2026: Will Crypto Rally Again?

Published by
Zafar Naik and Qadir AK

Morgan Stanley has just dropped a big prediction: the Federal Reserve is expected to cut interest rates seven times by the end of 2026, bringing the benchmark rate down to between 2.5% and 2.75%. It’s a forecast that could have wide-reaching effects, not just on traditional markets, but also on crypto.

If history is any guide, a shift like this could mark a major turning point for Bitcoin and other digital assets. 

Let’s explore why.

Rate Cuts Delayed, Not Cancelled

Initially, some expected the Fed to begin lowering rates as early as this summer. But that timeline has now shifted. According to Morgan Stanley, the first cut is likely to happen in March 2026.

The reason is not hard to guess. Inflation! Specifically, inflation linked to the latest tariff announcements. Michael Gapen, U.S. Chief Economist at Morgan Stanley, explained the shift clearly:

“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.”

So, instead of a slow and early easing, Morgan Stanley now expects a more concentrated series of cuts starting next year.

What It Means for Crypto and Risk Assets

When interest rates fall, borrowing gets cheaper. Liquidity improves. And investors tend to move away from low-yield assets in search of higher returns. That’s where crypto usually enters the picture.

This kind of environment has historically fueled growth in riskier markets. After the 2008 financial crisis, low interest rates played a key role in pushing investment into new asset classes – including Bitcoin, which emerged during that very cycle.

If Morgan Stanley’s forecast holds, it could pave the way for a similar setup. A low-rate world tends to encourage risk-on behavior, and crypto has long been a top candidate when investors go looking for growth.

Bitcoin’s Position Right Now

As of now, Bitcoin is trading at $106,476, with a market cap of $2.12 trillion and a 24-hour gain of 0.70%. It currently dominates 64.57% of the entire crypto market.

The price action seems normal now, but sentiment is gradually building. With rate cuts on the horizon and Bitcoin ETFs continuing to attract attention, many see this as a key setup for the next phase of adoption.

Markets Are Listening, Even If the Fed Isn’t Talking Yet

So far, there’s been no official word from the Federal Reserve on this forecast. But that doesn’t mean it’s not being taken seriously. In fact, Morgan Stanley’s call is already sparking conversations across both Wall Street and crypto circles.

This could change how portfolios are built and how capital flows into assets like digital currencies.

Could This Spark the Next Big Crypto Run?

It’s still early, but if the Fed follows the path Morgan Stanley has laid out, it could reignite momentum in crypto markets. Not just for Bitcoin, but for Ethereum, ETFs, and even newer altcoins gaining traction in global hubs like the Cayman Islands.

Seven rate cuts over two years is a big move. And in crypto, big moves tend to bring big reactions.

For now, it’s a waiting game. But smart investors know the pivot could be coming and they’re already preparing for what happens next.

FAQs

How could Fed interest rate cuts impact the cryptocurrency market?

Lower interest rates make borrowing cheaper and increase market liquidity. Historically, this encourages investors to seek higher returns in riskier assets like crypto, potentially fueling a new growth phase for Bitcoin and altcoins.

Why are the Federal Reserve’s rate cuts delayed?

The initial timeline for rate cuts has shifted due to persistent inflation, specifically tariff-induced inflation. Morgan Stanley’s chief economist states that this will keep the Fed from easing sooner.

What is Bitcoin’s current market position in anticipation of rate cuts?

Bitcoin is currently trading around $106,476, dominating 64.57% of the crypto market. Sentiment is building, with ongoing Bitcoin ETF inflows, as investors anticipate the potential for further adoption and a significant rally from future rate cuts.

Zafar Naik and Qadir AK

Zafar is a seasoned crypto and blockchain news writer with four years of experience. Known for accuracy, in-depth analysis, and a clear, engaging style, Zafar actively participates in blockchain communities. Beyond writing, Zafar enjoys trading and exploring the latest trends in the crypto market.

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