As Bitcoin (BTC) enters 2026, while supported by global liquidity, it also faces concerns from investors due to the “halving” theory.
Bitcoin prices continue to reflect a complex mix of long-term macro trends and market-specific movements, said Jim Ferraioli, director of crypto research and strategy at the Schwab Center for Financial Research.
Ferraioli said there are three fundamental long-term and seven short-term factors shaping Bitcoin. Long-term factors include changes in the global M2 money supply, Bitcoin’s resilience to inflation and gradual slowing of supply growth, and overall adoption. Short-term factors include market risk appetite, interest rates, a strong US dollar, seasonality, excess liquidity provided by central banks, large supply of Bitcoin wallets, financial contagion, etc.
Some of these short-term indicators are aligning in favor of Bitcoin in early 2026. Ferraioli noted that the speculative derivatives positions that caused the sharp decline in late 2025 have largely been eliminated, but credit spreads remain tight. “The risk-eleven environment in equities supports cryptocurrencies, the ultimate risk asset,” the analyst said, adding that the new expansion of global liquidity is also providing further impetus.
Central bank policy could also provide a boost. “We expect interest rates and the dollar to continue to fall this year. Liquidity conditions support Bitcoin,” Ferraioli said, noting that quantitative tightening is over and balance sheets are starting to expand again.
However, some obstacles remain. Ferraioli believes adoption may slow in the first half of this year, especially given the swings at the end of 2025, but that this trend could be reversed with increased regulatory clarity. “The passage of the Transparency Act could accelerate interest from genuine institutional investors,” the analyst said, adding that the law could instill confidence in the industry.
The half-life theory also plays an important role in investor psychology. Ferraioli said the third year after the halving has historically underperformed, and a large group of investors who believe in this theory could put downward pressure on prices in 2026. However, the overall outlook for Bitcoin remains positive when considering long-term money supply and liquidity dynamics.
The analyst noted that Bitcoin has risen an average of about 70% each year since its 2017 lows, but the metric is used to smooth out volatility. Although Ferraioli expects returns to be positive in 2026, he expects them to remain well below historical averages.
Moreover, the relationship between Bitcoin and traditional assets is also showing signs of change. Ferraioli said he expects cryptocurrencies to move less dependent on broader macroeconomic factors and other asset classes, noting that while they remain highly correlated with very large-cap AI stocks, their correlation with general stock market indexes is gradually weakening. This trend suggests that Bitcoin may exhibit a more unique price trend from 2026 onwards.
*This is not investment advice.
