VanEck: Bitcoin’s Broken Cycle Signals Near-Term Caution But Long-Term Bullish Trend Remains Intact

In Brief

VanEck’s Q1 2026 outlook highlights improved market visibility and renewed investment opportunities across AI, nuclear, BDCs, gold, India and crypto following broad valuation resets and a stabilizing macroeconomic environment.

Investment management firm VanEck published a cryptocurrency market outlook for the first quarter of 2026 in which several major developments and positioning themes were discussed

The report stated that widespread selloffs in AI-related equities during the latter part of 2025 resulted in a broad reset of valuations, which in turn created improved opportunities across AI and related sectors, including nuclear energy. It further indicated that gold has continued its return as a prominent global monetary asset and that recent price retracements have provided more favorable entry conditions. It also noted that business development companies experienced a challenging performance in 2025, but current market conditions now present more attractive yield profiles and valuation levels. Additionally, the outlook maintained that India continues to represent a high-conviction growth opportunity, while the long-term outlook for cryptocurrency remains positive despite a mixed near-term environment.

VanEck explained that as 2026 approaches, financial markets are functioning within a framework that investors have not experienced for several years, characterized by increased visibility. The firm described that enhanced clarity surrounding fiscal policy, monetary policy direction, and dominant investment themes is supporting a more constructive risk-oriented environment, even as disciplined asset selection remains necessary. Following a sharp correction in select AI equities during the latter part of the previous year, VanEck assessed that the AI investment theme has become more attractive compared with the elevated valuation levels observed in October. The firm emphasized that this repricing occurred despite continued strong underlying demand for computing infrastructure, token usage, and productivity enhancements. Related segments, including nuclear power companies linked to AI-driven electricity consumption, have also undergone substantial valuation adjustments. According to VanEck, this repricing process has improved the overall risk-reward profile for investors operating with a medium-term investment horizon.

The report identified a reduction in potential fiscal and monetary surprises as one of the most important developments for market participants. It observed that while US fiscal deficits remain high, they are declining as a share of gross domestic product from the extreme levels recorded during the COVID period. This improvement in the fiscal backdrop has contributed to stabilizing longer-term interest rates and diminishing tail risk exposures. Regarding monetary policy, Treasury Secretary Scott Bessent’s description of prevailing interest rate levels as “normal” was cited as an indication that markets should not anticipate aggressive or destabilizing rate reductions during 2026. Instead, the outlook described a path of stable policy conditions, incremental adjustments, and a reduced frequency of disruptive events, further contributing to the overall improvement in market visibility.

VanEck Highlights Renewed Opportunities Across BDCs, Gold, India, And Crypto Markets

The report also reviewed sector-specific developments, noting that nuclear-related equities experienced a correction during the fourth quarter. Business development companies were described as having endured a difficult 2025, yet the subsequent valuation reset has created renewed opportunity. VanEck indicated that yields within the BDC sector remain appealing and that prevailing concerns regarding credit risk have largely been incorporated into current pricing, making the sector more attractive than it was one year earlier. The management firms associated with these vehicles, including Ares, were also described as trading at valuation levels that more closely align with their long-term earnings capacity and historical performance records.

Gold’s role was highlighted as continuing to strengthen as a global monetary asset, supported by sustained central bank accumulation and a global financial system that is becoming progressively less dependent on the US dollar. Although gold prices appear somewhat extended based on technical indicators, VanEck stated that periods of price weakness should be viewed as opportunities to increase exposure, as the underlying structural investment thesis remains intact. The report emphasized that gold prices remain above key support levels and that demand dynamics continue to reinforce its long-term positioning.

Beyond US markets, VanEck reaffirmed India’s position as a high-conviction long-term growth opportunity, driven by ongoing structural reforms and resilient economic growth characteristics. In the digital asset market, the firm observed that Bitcoin’s traditional four-year market cycle failed to materialize in 2025, complicating short-term forecasting signals. This deviation from historical patterns supports a more cautious near-term outlook over the following three to six months, although the report acknowledged that this perspective is not uniformly held within the firm. Internal discussions remain active, with colleagues maintaining a more optimistic assessment of the current phase of the market cycle.