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By: Matt Weller, Head of Market Research
Bitcoin Key Points
In our Bitcoin Q4 outlook, we asked a provocative question: Is Bitcoin’s historically-reliable 4-year cycle dead? While its premature to say definitively just one quarter after it would have usually projected a peak, Q4’s bearish price action (-20% or so as of writing in mid-December) hints that it may still be kicking.
Below, we break down the outlook for the king of cryptocurrencies and highlight relevant fundamental and technical trends that will drive Bitcoin in the coming year.
As we noted last quarter, many analysts have identified a reliable 4-year cycle centered around the Bitcoin Halving that projected a potential peak in September.
For the uninitiated, the Bitcoin Halving is when the reward for mining new bitcoins is cut in half. This reduces the rate at which new bitcoins are created and thus lowers the total supply of new bitcoin coming into the market. The halving tends to increase scarcity and historically has led to an increase in the price of bitcoin, though of course it's not guaranteed to do so in the future. As any Bitcoin bull will tell you, the April 2024 halving took the “inflation rate” of Bitcoin’s supply to below 1% per year, less than half of gold’s annual inflation rate.
Looking at my favorite chart, which I colloquially call “The Only Bitcoin Chart You'll Ever Need™”, previous Bitcoin halvings have marked the transition from the (yellow) post-bottom recovery rally stage to the (green) full-blown bull market stage that we’ve been in since April of last year.
Projecting a similar time-based cycle forward from the last halving suggests that we may have reached the peak of the current cycle at the start of Q4:
Source: TradingView, StoneX. Past performance is no guarantee of future returns.
Beyond the 4-yearh cycle itself, the fundamental and technical outlook for Bitcoin is also less bullish (though not outright bearish) than it’s been in several quarters, raising the risk of a neutral-to-negative 2026 for the cryptocurrency.
From a macroeconomic perspective, the monetary policy backdrop remains generally supportive, though we may be nearing a shift toward tightening if central bank expectations play out as expected. As the chart below shows, global central banks have still been cutting interest rates generally, but we have seen that trend stalling in recent months, with major central banks like the ECB, BOJ, BOC and RBA expected to start raising interest rates in the coming year:
Source: MacroMicro
Looking ahead, the risk that central banks shift focus back to the risks of re-accelerating inflation may develop into a potential headwind for Bitcoin as we move through 2026, especially amidst generally accommodative fiscal policy across the globe.
In that vein, the growth rate fiat money in the financial system has turned to a more stimulative direction. So-called “M2” is central banks’ estimate of the total money supply, including all the cash people have on hand, plus all the money deposited in checking accounts, savings accounts, and other short-term saving vehicles such as certificates of deposit (CDs).
The year-over-year growth in global money supply has accelerated in recent months and is near 4-year highs at 9%+ as we go to press:
Source: TradingView, StoneX.
One of the key narratives driving Bitcoin’s value is the idea of “hard money” or a hedge against fiat currency debasement, and as long as the global supply of money continues to increase, that theme could put a floor under the cryptocurrency’s price.
Beyond broad macroeconomic dynamics, a key theme support Bitcoin in recent years has been accumulation by large financial institutions and mom-and-pop investors. In addition to the growing popularity of firms accumulating the cryptocurrency as a treasury asset, we’ve also seen impressive inflows from “TradFi” institutional investors buying spot Bitcoin ETFs, with total inflows into Bitcoin ETFs near $60B, albeit down slightly from the early Q4 peak:
Source: Farside Investors
Broadly speaking, as long as “TradFi” ETF purchases remain positive, downside dips in Bitcoin may be more limited than they have in the past.
From a valuation perspective, the MVRV (Market Value to Realized Value) Z-score, which compares the current price to the aggregate cost paid for all outstanding Bitcoin, has fallen to just 1.2, closer to the typical bear market bottom zone at 0 than the recent peak above 3.
Source: Bitcoin Magazine. Past performance is not indicative of future returns.
Broadly speaking, this may be one of the best signals that the typical 4-year cycle is losing its significance, as the indicator never even approached they typical bull market peak zone near 7 before rolling over to close 2025. Time will tell whether this indicator remains a reliable measure moving forward.
A final consideration is the behavior of long-term holders. As we’ve noted in previous outlooks, those who have held their Bitcoin for more than a year, almost tautologically, are not trying to make a “quick buck” off the cryptocurrency; rather they are more likely to be “true believers” or “HODLers” who are unlikely to sell unless they’re sitting on a truly massive gain.
As the chart below shows, the proportion of Bitcoin that has been held for at least a year started 2024 at record highs above 70% before seeing a notable decline to below 59% as of writing. While that -11% drop may seem relatively small, it represents over 2 million BTC in marginal Bitcoin supply, weighing on the Bitcoin price. This measure, by definition, moves relatively slowly, but any renewed selling from longer-term “HODLers” may offset inflows into ETFs as we move through 2026:
Source: MacroMicro.me
Taking these diverse forms of analysis in totality, the outlook for Bitcoin in 2026 is mixed: While valuations, money supply, and ETF purchases signal continued upside potential, a shift in monetary policy, the behavior of long-term holders, and the 4-year cycle (if still valid) all point to weakness over the coming year. Accordingly, it makes sense to defer to the technical outlook (below) throughout the year and watch the key levels for near-term setups, rather than staking out a strong position and maintaining it all year.
Of course, the catalysts we highlight in this report may not play out as expected – and to some extent, they may already be priced in, so readers should always exercise caution when trading Bitcoin and other cryptoassets. As ever, it will be critical to monitor a broad swath of macroeconomic and crypto-specific metrics as the year develops.
Source: TradingView, StoneX
Looking at the longer-term chart, Bitcoin’s Q4 drop has undoubtedly take the shine of the cryptocurrency, though it hasn’t done substantial technical damage (yet?). The pattern of higher highs and higher lows (the textbook definition of an uptrend) remains intact as long as support at $74K, keeping hopes alive for a rally to new highs in 2026.
That said, Bitcoin has broken below its 50-day EMA for the first time in years, and the 14-week RSI is holding below 40 as we go to press, suggesting the bullish trend may be coming to an end. If the $74K level gives way at any point in 2026, it would set the stage for a deeper pullback into the 2024 range, with the bottom of that range sitting down at $53K.
-- Written by Matt Weller, Global Head of Research
Follow Matt on Twitter: @MWellerFX
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