Crypto Asset Market in 2026: Extensive Structural Transformation and New Developments in Bitcoin

Bitcoin has seen a year-to-date increase of about 7% in early 2026 and is currently hovering around $84,800. This upward trend is supported by political instability in the United States and a broader shift in market mechanisms. There has been a major structural shift in the crypto market over a four-year cycle, and a new suite of products for institutional investors is fundamentally changing market dynamics.

Geopolitical Risks and the Broader Macro Environment Driving the Market

After breaking away from last year’s low of around $80,000, Bitcoin briefly rose to $97,000 in mid-January 2026. After subsequent adjustments, it remains at its current level. According to Greg Cipollaro of NYDIG Research, who analyzes this price movement, the short-term upside is attributed to political instability in the United States.

The ongoing tensions between current President Donald Trump and Federal Reserve Chairman Jerome Powell have significantly influenced market sentiment. Chairman Powell’s decision to forgo interest rate cuts in response to President Trump’s request has raised more serious concerns about political intervention in monetary policy.

As a historical lesson, President Richard Nixon’s pressure on the Federal Reserve in 1972 is referenced. As Cipollaro points out, the warning that “political intervention in monetary policy almost without exception has a negative impact, with high inflation, central bank credit deterioration, and currency weakening being typical by-products” has increased investor interest in non-sovereign assets.

At the same time, the broader macroeconomic environment also supports the investment demand for Bitcoin. The global money supply has reached an all-time high, and as precious metals such as gold and silver have risen sharply, Bitcoin as “digital gold” has followed suit.

The End of the Halving Cycle and Market Dominance by Institutional Investors

Traditionally, Bitcoin has formed a large price cycle linked to halving events (events where block validation rewards are halved) approximately every four years. This cycle repeated the typical pattern of a rally immediately following the halving, followed by increased speculative fever and a bear market before the next halving.

However, according to market maker Wintermute, this four-year cycle may have come to an end. “While 2025 did not bring the expected rally, it may be seen as the beginning of the transition of crypto assets from speculative assets to a more established asset class,” the company noted.

Behind this shift is the rise of a new suite of products for institutional investors. Products like exchange-traded funds (ETFs) and digital asset trusts (DATs) have transformed traditional fund rotation mechanisms, while providing continued demand for large-cap assets.

In previous altcoin seasons, the natural capital circulation has worked, with Bitcoin profits flowing into Ether, then mainstream altcoins, and finally speculative tokens. However, according to Wintermute data, this transmission mechanism is no longer working.

In 2025, the rally duration for altcoins will be shortened to just 20 days on average, a significant decrease from over 60 days in the previous year. While a few major large-cap assets absorb the majority of new capital, the majority of the market struggles to maintain momentum.

Shifting Funds to a Broad Asset Class

There is another factor in the stagnation of the altcoin market. The interest of small investors has shifted from crypto assets to the stock market. Wintermute said, “2025 has been a year of extreme concentration,” revealing that investors’ attention is focused on AI, rare earths, and quantum computing stocks.

This trend of fund shifting is also reflected in the extensive portfolio construction by institutional investors. Currently, spot Solana (SOL) and XRP (Ripple) ETFs are being traded, and ETF applications related to various altcoins are under review. This suggests that a broader and multi-layered asset allocation strategy is being deployed, which differs from the traditional crypto market.

Three Drivers Driving Future Growth

How the market will fare throughout 2026 will depend on the action of three key drivers:

First, extensive portfolio expansion by institutional investorsThere is. The inclusion of a wider range of digital assets by large institutional investors, such as ETFs and treasury companies, could enhance overall market liquidity.

Second, the resurgence of the wealth effectis. A strong Bitcoin or Ethereum rally can result in unrealized gains for investors, which can create a ripple effect on the broader altcoin market.

Third, the return of small investorsis. The return of funds from the stock market to the crypto market may lead to new stablecoin inflows and a rebound in risk appetite.

Wintermute cautiously states that “it is still uncertain how much capital will eventually flow back into digital assets.” The outcome will depend on whether any of these drivers meaningfully expand liquidity beyond large-cap assets or whether the current market concentration continues.

The broader structural shift in the market is not just a temporary trend but suggests a shift towards a more mature market environment, created by the rise of institutional investors and the diversified investment preferences of small investors.