Here are the Three Main Factors Driving Bitcoin and Crypto Prices in 2026

Here is an in-depth analysis of the cryptocurrency market dynamics in early 2026, filled with significant changes. Entering 2026, Bitcoin and other cryptocurrencies are experiencing positive momentum after passing through a challenging consolidation period. With geopolitical tensions and structural transformations in capital flows, the digital market shows signs of promising recovery.

Early 2026 Momentum: Bitcoin Breaks Through Critical Levels

Bitcoin has demonstrated an impressive performance at the start of this year. The current BTC price is at $87.91K with a 24-hour fluctuation of -1.90%, after previously reaching $97,000 at the beginning of the quarter. This significant increase comes after BTC successfully broke through last year’s low around $80,000, marking an important turning point in market sentiment.

Not only Bitcoin, but Ethereum also records a price of $2.95K, while Solana continues to show strength with a price point of $123.19. Bitcoin’s movement has generated momentum for other cryptos, creating ripple effects across the ecosystem. XRP also shows interesting activity with a price of $1.88, driven by the launch of a spot ETF attracting inflows of $91.72 million this month.

Political Instability and Structural Market Shifts

According to analysts from NYDIG Research and leading market makers Wintermute, the price increases seen in early 2026 are primarily driven by two main factors: geopolitical risks and the transformation of how capital flows through the crypto ecosystem.

The most significant short-term driving factor is political instability in the United States. Analysis from NYDIG Research indicates growing tensions between executive leadership and independent monetary institutions. Greg Cipolaro from NYDIG highlights that history shows political interference in monetary policy almost always results in negative consequences—higher inflation, disrupted central bank credibility, and currency devaluation. Bitcoin, as a non-sovereign asset with a fixed supply, may benefit from investor concerns about these risks.

Meanwhile, global money supply has reached record highs, and traditional store-of-value assets like gold have surged dramatically. In this context, Bitcoin as “digital gold” seems to be catching up, reflecting demand for non-sovereign store-of-value assets on a global scale.

Additionally, the reduction of “overhang” or excess supply also contributes. Year-end tax-loss selling has ended, as has the excess burden from October liquidations that left some exchanges with unhedged long positions.

The Four-Year Halving Cycle: Has It Ended or Transformed?

There is an ongoing debate about whether the Bitcoin “four-year” halving cycle has reached its end. Halving is an event where the reward for verifying new blocks on the Bitcoin blockchain is cut in half, occurring every 210,000 blocks (roughly four years).

Historically, Bitcoin and the broader crypto market have oscillated in this four-year pattern. BTC tends to rise immediately after halving, which then propels the broader market upward, sparking speculative mania, and ending with bearish pressure before the next halving.

However, Wintermute presents a different thesis: this four-year cycle may have ended. 2025 did not produce the expected rally from the traditional cycle, but may mark the beginning of a transition in crypto from pure speculation to a more mature and structured asset class.

The mechanism of crypto wealth transmission has experienced significant disruption. The gains flowing from Bitcoin to Ethereum, then to blue-chip altcoins, and finally to speculative tokens (altseason) seem to be interrupted. The cause is the emergence of institutional products like ETFs and digital asset trusts (DAT).

ETFs and DATs have become “walled gardens,” providing ongoing demand for large-cap assets but not rotating capital into broader markets. Data shows that in 2025, the average altcoin rally lasted only 20 days, a sharp decline from over 60 days in 2024. A handful of major assets absorbed most of the new capital, while most of the market struggled to maintain momentum. Retail interest has also shifted to stocks—especially AI stocks, rare earth metals, and quantum computing.

Three Key Catalysts for Future Price Movements

Here are three main catalysts that Wintermute believes could push crypto prices beyond current levels and reignite broader market movements.

First, Institutional Product Expansion: Institutional vehicles like ETFs and treasury companies need to incorporate a broader set of digital assets. Early signs are visible with the trading of SOL and XRP spot ETFs, as well as various ETF filings for other altcoins under review. This expansion could drive capital flows into non-tier-1 assets.

Second, Wealth Effect from Strong Rallies: A strong BTC or Ethereum rally could generate capital gains for investors, which could then spill over into the broader altcoin market, revitalizing capital rotation dynamics.

Third, Return of Retail Investors: Retail investors shifting from cryptocurrencies to stocks may return to the digital space, bringing in new stablecoin inflows and renewed risk appetite.

However, the scale of capital ultimately flowing back into digital assets remains uncertain. The outcome will depend on whether one or a combination of these catalysts manages to expand liquidity beyond a few large-cap assets, or if capital concentration continues to persist in a more fragmented ecosystem.

These are the conditions that will continue to shape the crypto landscape— a complex interplay of structural market changes, institutional demand, and evolving investor sentiment in 2026.