Will the Crypto Market Enter a Super Cycle of Strong Growth in 2026?

When discussing market prospects for the coming year, many investors are focusing their attention on the FOMC meetings of the U.S. Federal Reserve (Fed) in 2026. However, upon closer inspection, the core issue revolves around a single point: the Fed has quietly started injecting money back into the market. Although not publicly declaring “loose monetary policy,” their actions are very clear — purchasing approximately 40 billion USD of short-term Treasury bills each month. Essentially, this is a form of “life extension” for the financial system.

Bank Liquidity Is Dwindling The reason behind the Fed’s necessary actions is not overly complicated: the United States is running out of money, especially within the banking system.
The IORB interest rate (the return when banks deposit money at the Fed) is considered an “absolutely safe” profit level. Meanwhile, SOFR is the borrowing rate between banks with government bonds as collateral, more accurately reflecting the actual condition of the capital market.
Under normal conditions, when liquidity is abundant, market interest rates are lower than the “Fed deposit” rate. But currently, SOFR has been steadily rising, indicating that banks are willing to pay high prices just to have cash. This is a typical sign of a silent liquidity crunch.
If this situation spirals out of control, not only the stock market but also the bond market could face significant risks. The Fed clearly cannot stand by and do nothing.

Worsening Employment Data, Increasing Pressure on the Fed Private sector employment data also looks bleak. The ADP report shows that in 2025, there have been months of negative job growth, with tens of thousands of workers being laid off. The reason is straightforward: prolonged high-interest rates have sharply increased capital costs, eroding corporate profit margins. Companies are forced to tighten hiring or even lay off staff to survive.
When people lose jobs or fear unemployment, consumer spending weakens, and the risk of a “hard landing” for the economy becomes more apparent. In this context, inflation becomes a problem that the Fed can temporarily tolerate, but recession is not. Thus, the familiar paradox appears: bad news for the real economy often signals good news for the asset markets.

The Fed Must Buy Assets Some Fed officials have openly admitted that liquidity in the banking system is not as abundant as they previously thought. The market is “speaking out” through prices and interest rates. To prevent bank reserves from continuing to decline, the Fed has no choice but to return to asset purchases. Whether short-term or long-term bonds, as long as the Fed buys, it essentially means expanding the balance sheet, i.e., pumping money into the system.

Stock Market Structure and Risk Flows Comparing the Russell 2000 (representing small businesses) with the S&P 500 (representing large corporations) clearly shows the risk appetite of capital flows. When this ratio drops sharply, it indicates investors are risk-averse, channeling funds into large-cap stocks.
Currently, this ratio is at a historic low, meaning small-cap stocks are undervalued like never before compared to large caps. It’s like a spring compressed to its limit. Over the long term, financial markets never move in one direction forever; when an imbalance becomes large enough, capital will seek out neglected areas.
Within the risk hierarchy, crypto occupies the highest tier, just after small caps. When money begins to exit safe assets, the next destination is very likely the cryptocurrency market.

Important Note: Money Injection Does Not Mean Immediate Rise A point worth emphasizing: whenever the Fed officially loosens policy or expands its balance sheet, the market does not usually rise immediately; it can even decline beforehand. The reason is that expectations are already priced in early, and when policies are implemented, investors realize the actual situation is more severe than they thought.
Moreover, money does not flow into the market right away. In the initial phase, institutions often need to handle debt, add margin, or cope with withdrawal pressures, leading to the sale of highly liquid assets. Typically, it takes a few weeks to a month for the cash flow to start spreading.
This process also follows a clear order: securities first, small-cap stocks second, then crypto. In crypto, Bitcoin usually benefits first, followed by Ethereum, and then other tokens.

Overall Outlook for 2025–2026 From many perspectives, the high probability is that asset prices will continue to rise in the medium term, but the crypto market is unlikely to enter a “super crazy bull run” immediately. A more realistic scenario is strong recoveries from the lows, especially since most altcoins have been heavily sold off.
Another noteworthy factor is politics. Before the end of their term, Fed Chair officials are unlikely to publicly admit they are “dumping liquidity,” but their actions tell a different story. The leadership change at the Fed in 2026 could act as a catalyst for a final cycle peak.

Conclusion The crypto market in 2026 may not explode immediately into a super cycle, but the opportunities for strong rebounds are very clear. By focusing on major coins like BTC, ETH, BNB, combined with tight risk management and patience for genuine capital inflows, investors can fully capitalize on this crucial transitional phase of the market.