Market watchers on Wall Street are positioning for an interesting 2026. The consensus? Inflation will actually come in softer than expected—a downside surprise to the base case. Why does this matter? Because a cooling inflation backdrop combined with policy support could create the perfect setup for a juiced economy pushing equity valuations higher.

The logic is straightforward: if inflation moderates without crushing growth, the Fed maintains flexibility. Corporations get to expand margins. Risk assets, including equities, benefit from the combination of supportive fundamentals and looser financial conditions. It's the kind of macro environment that historically supports cyclical strength.

For crypto observers, this narrative ties into broader liquidity dynamics. When traditional equities are expected to run, capital flows and risk-on sentiment tend to move in tandem across asset classes. Whether inflation really does surprise lower remains the key variable—but market participants are already pricing in that bullish scenario for the year ahead.