Bitcoin cycle weakens... 2026 variables are institutions, interest rates, and retail

2026-01-14 01:40:06

Source: BlockMedia Original Title: Bitcoin Cycle Weakening…2026 Variables Are Institutions, Interest Rates, and Retail Original Link: The sluggishness of the virtual asset market in 2025 has been analyzed as a structural change rather than a temporary correction. Market maker Wintermute diagnosed that the whether there will be a rebound in 2026 depends on three variables: institutional expansion, interest rate environment, and retail investor return.

In their published digital asset over-the-counter trading market report, Wintermute analyzed that the 2025 Bitcoin bull market did not spread to altcoins as it did in the past. This suggests that the traditional four-year cycle of upward trends has weakened or effectively collapsed.

According to the report, in the past, gains from Bitcoin and Ethereum circulated into altcoins, creating long-term rallies, but in 2025, this ‘funds re-circulation’ pattern was broken. This was due to the introduction of spot Bitcoin ETFs and inflows of institutional funds, which concentrated liquidity into a few large assets.

Wintermute pointed out that the market breadth has significantly narrowed. The average duration of altcoin rallies in 2025 was about 20 days, a sharp decrease from approximately 60 days the previous year. Only some tokens performed relatively well, but the overall market continued its bearish trend due to factors like token unlock burdens.

Wintermute stated that at least one of three conditions is necessary for recovery in 2026: increased investment from ETFs and digital asset financial firms beyond Bitcoin and Ethereum, wealth effects from additional strength in major assets, or a return of interest from retail investors.

However, they believe that the return of retail investors will not be easy. Memories of large losses during the 2022–2023 bear markets remain, and in 2025, traditional growth sectors such as AI, robotics, and quantum computing outperformed Bitcoin and Ethereum returns.

Some experts cite macroeconomic conditions as key variables. Oun Rauw, Managing Director of Clearstreet, said that a rate cut by the U.S. Federal Reserve could stimulate risk asset appetite. The market is expecting about two rate cuts this year.

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