After this round of rate cuts in December, many people are asking: Will the Fed continue to cut rates? How much room is left for rate cuts?

Here’s the conclusion first—the rate cuts can’t go on forever. The current federal funds rate has already dropped to the 3.5%-3.75% range, while the widely recognized “normal” value is 3%. If there are two more 25-basis-point cuts by 2026, that’ll basically do it. Without a financial crisis, 3% is the invisible bottom line.

Looking back, starting from this year, the Fed has already cut rates seven times. But here’s the problem—inflation is still stuck at 3%, which is still some distance from the target. What does this mean? The rate-cutting cycle is already in its middle-to-late stage, you could even say it’s nearing the end.

If you lay out the timeline: There’s a decision on January 28, 2026, but the chances of another cut then are slim to none. The real possibility is at the March 18 FOMC meeting, or maybe it’ll be pushed to April. And a lot of data will have to be monitored in between—employment, consumption, inflation expectations. If any of these numbers don’t cooperate, the rate cuts could be put on pause.

To say something less optimistic: This rebound window in the current bear market is most likely the only shot we’ll get. The overall market environment next year? Personally, I think it will be quite unfriendly. Once expectations of tightening liquidity take hold, volatility in the crypto market will be even greater than most imagine.