As Bitcoin (BTC) enters 2026, it is both supported by global liquidity and faces concerns from investors following the “halving cycle” theory.
According to Jim Ferraioli, director of crypto research and strategy at the Schwab Center for Financial Research, the Bitcoin price continues to reflect a complex combination of long-term macro trends and market-specific developments.
Ferraioli stated that there are three fundamental long-term forces and seven short-term factors shaping Bitcoin. Long-term factors include changes in the global M2 money supply, Bitcoin’s resilience to inflation and progressively slowing supply growth, and its overall adoption rate. Short-term factors include market risk appetite, interest rates, the strength of the US dollar, seasonality, excess liquidity provided by central banks, the supply of large Bitcoin wallets, and financial contagion.
Some of these short-term indicators are aligned in favor of Bitcoin in early 2026. Ferraioli noted that speculative derivative positions that triggered the sharp sell-off in late 2025 have been largely cleared, while credit spreads remain tight. “The risk-eleven environment in equities supports crypto, the ultimate risk asset,” the analyst said, arguing that the renewed expansion of global liquidity is also providing an additional impetus.
Central bank policies could also provide a potential boost. Ferraioli noted that quantitative tightening has ended and balance sheets are beginning to grow again, stating, “We expect interest rates and the dollar to continue falling this year. Liquidity conditions support Bitcoin.”
However, some obstacles remain. Ferraioli says adoption may slow in the first half of the year, especially following the volatility at the end of 2025, but believes this trend could reverse if regulatory clarity increases. “The passage of the Clarity Act could accelerate interest among genuine institutional investors,” the analyst said, adding that the law could instill confidence in the sector.
The halving cycle theory also plays a significant role in investor psychology. According to Ferraioli, the third year after the halving has historically shown weak performance, and the large group of investors who believe in this theory could put downward pressure on 2026 prices. However, considering long-term money supply and liquidity dynamics, the overall outlook for Bitcoin remains positive.
The analyst noted that Bitcoin has risen by an average of around 70 percent each year since its low point in 2017, but this metric is used to smooth out volatility. While Ferraioli expects returns to be positive in 2026, he predicts they will remain significantly below the historical average.
Furthermore, Bitcoin’s relationship with traditional assets is also showing signs of shift. Ferraioli stated that he expects the cryptocurrency to move less dependently on broader macroeconomic factors and other asset classes, noting that while correlation with very large AI stocks remains high, the link with general stock market indices is gradually weakening. This trend suggests that Bitcoin may have a more unique price dynamic in 2026 and beyond.
*This is not investment advice.
