Institutional DAT Changes the Structure of the Crypto Market, the True Reason for Bitcoin's Rally in 2026

In early 2026, Bitcoin rose about 7% year-to-date, reaching a high of $97,000 at one point. However, with a correction in late January, it is currently hovering around $83,500, indicating a notable market volatility. This shift is not just about price fluctuations but also about a profound structural shift in the crypto market, particularly the rise of institutional products like digital asset trusts (DATs) and exchange-traded funds (ETFs), which are poised to fundamentally alter market dynamics.

According to analysts at NYDIG Research and Wintermute, the traditional crypto market was dominated by speculative cycles by retail investors. However, now the structure is changing significantly. The four-year cycle based on the Bitcoin halving has come to an end, and institutional products such as ETFs and DAT are emerging as “new market rulers”.

The 4-year cycle is over, and the era of institutional investors is shifting

Traditionally, the Bitcoin market has repeated major cycles around halving events approximately every four years. A halving is an event in which Bitcoin’s mining rewards are halved, occurring approximately every 210,000 blocks, or every four years. Historically, Bitcoin has formed a speculative cycle of significant gains immediately after this event, followed by a shift to a bear market before the next halving.

Wintermute recently noted that “the four-year cycle is over.” This turning point is driven by the rapid expansion of institutional products such as DATs and ETFs. These financial instruments have resulted in a different capital flow mechanism than retail investors.

DAT and ETFs act like a “fenced garden”, so to speak. This means that while there is a continuous demand for large assets (Bitcoin, Ethereum) through these products, the traditional mechanism of the natural flow of capital to other altcoins is not working.

Geopolitical Risks Reaffirmed the Value of Non-Sovereign Assets

One of the main factors driving the year-to-date rally is political instability in the United States. The tension between former President Donald Trump and Fed Chairman Jerome Powell has had a significant impact on market sentiment.

According to Greg Cipollaro (NYDIG Research), distortions in monetary policy due to political intervention have historically had a negative impact almost without exception. President Richard Nixon’s intervention in the Federal Reserve in 1972 is a similar pattern. The result is a typical byproduct of high inflation, declining central bank credit, and a weakening currency.

Amidst these macroeconomic risks, there is a growing demand for non-sovereign assets like Bitcoin with a fixed supply. The global money supply has reached an all-time high, and precious metals such as gold and silver have also skyrocketed. However, Bitcoin, which is considered “digital gold”, was once left behind by these movements. Cipollaro noted that “truly non-sovereign stores of value are extremely rare,” noting that Bitcoin is finally catching up with that realm.

The weight of market sentiment is being lifted one after another

The rise at the beginning of the year was also contributed to the release of multiple structural “weights”.

Tax-loss harvesting, a method in which investors realize losses at the end of the year to offset gains made on other assets, ended in early 2026. At the same time, the unhedged long positions arising from the large liquidation event in October are also gradually absorbed by the market. The reduction of these pressures has created the conditions for higher prices.

On the other hand, the majority of the market has not benefited from this. In the altcoin market in 2025, the duration of small rallies has been shortened to just 20 days on average, a significant decrease from more than 60 days in 2024. This means that while the majority of new capital is concentrated in the large assets of Bitcoin and Ethereum, it has not spilled over to the entire market.

Small investor interest shifts to other areas

One of the reasons why 2025 has become a “year of extreme concentration” is the shift in the investment targets of small investors. Their attention has shifted from the crypto market to AI-related stocks, rare earths, and quantum computing stocks. This outflow of funds has significantly reduced the presence of small investors in the crypto market.

3 Catalysts Supporting Future Gains

For the market to rise above current levels, several catalysts are needed.

First, institutional investors are incorporating a wider range of digital assets into their portfolios. Spot ETFs for Solana (SOL) and XRP are already being traded, and DAT applications related to various altcoins are under review. If the direct investment channels for multiple crypto assets are secured in the form of DAT, institutional investors’ capital currently concentrated in Bitcoin may be dispersed to the broader market.

The second is the resurgence of the wealth effect. The strong rally of Bitcoin and Ethereum can provide investors with psychological enrichment through unrealized gains, which can lead to capital inflows into the more speculative altcoin market.

The third is that small investors move their money from the stock market to the crypto market. It could bring new stablecoin inflows and a resurgence in risk appetite.

Wintermute said that “it is still uncertain how much capital will eventually flow back into digital assets.” The outcome will depend on whether any of these catalysts meaningfully expand liquidity beyond the primary asset or continue to be concentrated. How new mechanical products such as DAT are incorporated into the market is likely to be an important factor in determining the direction of the crypto market in 2026.