Whale Research: 2026 outlook — USD liquidity deteriorated, regionalisation reshapes allocations

Whale Research’s analysis for BeInCrypto says markets enter 2026 after an undercurrent-filled 2025, with USD liquidity deteriorating and a shift toward regionalisation already reshaping investor allocations. The report notes that three “defensive” Fed rate cuts and the end of quantitative tightening in late 2025 did not produce easy liquidity: the Effective Federal Funds Rate moved toward the upper bound of the corridor, SOFR remained above IORB, and banks appeared to deploy liquidity into financial investments rather than lending.

Repo activity rose from roughly $6 trillion to more than $12.6 trillion in 2025, margin debt climbed 36.3% to $1.23 trillion, and investors’ net debit balances expanded to about -$814.1 billion. Higher long-term funding costs persist: the 10-year Treasury yield fell only 31 bps while policy rates fell about 75 bps, leaving long-run funding above 4%.

That dynamic, plus shorter-duration T-bill financing, encouraged speculation and helped drive reduced leverage and the end of the crypto bull market in Q4 2025. Investors also practiced “strict diversification,” trimming USD exposure and allocating incremental liquidity more to non‑US markets; precious metals outperformed many major assets, and holding euros or Swiss francs performed no worse than the S&P 500.

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