Morgan Stanley Predicts 7 Rate Cuts by 2026 Boosting Crypto Markets

Morgan Stanley has forecasted that the Federal Reserve will implement seven rate cuts by the end of 2026, bringing the benchmark rate down to between 2.5% and 2.75%. This prediction has significant implications not only for traditional markets but also for the cryptocurrency sector. Historically, shifts in interest rates have marked turning points for Bitcoin and other digital assets, and this forecast could be no different.

Initially, there were expectations that the Fed would begin lowering rates as early as this summer. However, this timeline has been pushed back. According to Morgan Stanley, the first rate cut is now anticipated to occur in March 2026. The delay is primarily due to inflation concerns, particularly those linked to recent tariff announcements. Michael Gapen, U.S. Chief Economist at Morgan Stanley, explained that the tariff-induced inflation will keep the Fed from acting sooner, leading to a more concentrated series of rate cuts starting next year.

When interest rates fall, borrowing becomes cheaper, liquidity improves, and investors tend to move away from low-yield assets in search of higher returns. This environment has historically fueled growth in riskier markets, including cryptocurrencies. 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 cycle. If Morgan Stanley’s forecast holds, it could pave the way for a similar setup, encouraging risk-on behavior and making crypto a top candidate for growth-seeking investors.

Currently, Bitcoin is trading at $106,476, with a market cap of $2.12 trillion. It dominates 64.57% of the entire crypto market. While the price action seems normal now, 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. The markets are already taking note of Morgan Stanley’s call, sparking conversations across both traditional finance and crypto circles. This could change how portfolios are built and how capital flows into assets like digital currencies.

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. Seven rate cuts over two years is a significant move, and in crypto, big moves tend to bring big reactions. For now, it’s a waiting game, but smart investors are already preparing for what happens next. The cryptocurrency market is known for its volatility, and various factors, including regulatory changes and technological advancements, can influence its performance. Therefore, while the prediction of rate cuts by Morgan Stanley may contribute to a positive sentiment, investors should approach the market with caution and consider multiple factors before making investment decisions.