Bitcoin’s price dynamics have changed significantly over the past few years, challenging the traditional understanding of its four-year cycle. Experts from VanEck and 21Shares have weighed in on the new landscape, indicating that while the symbolic importance of Bitcoin’s halving cycle remains, it no longer serves as the key driver of market prices.
One notable observation from their reports is that Bitcoin’s annual issuance has plummeted to below 1%, now lower than gold’s inflation rate. This shift suggests that future halvings will have diminished effects since there is less supply to cut. As this mathematical reality sets in, it raises questions about the potency of halving events moving forward.
The profile of Bitcoin buyers has also evolved markedly. In 2025, large entities such as exchange-traded funds (ETFs), corporate treasuries, and sovereign governments have absorbed more Bitcoin than what was mined, creating a pool of stable, long-term capital that contrasts sharply with the retail-driven frenzy of previous years.
Another significant change is Bitcoin’s volatility. Recent market fluctuations have been less severe, with drawdowns capped at 30% compared to the significant losses of over 60% experienced in earlier cycles. As a result, Bitcoin is increasingly behaving like a mature asset, aligning with its characterization as “digital gold.”
With Bitcoin now trading around $87,746 and a market cap of $1.8 trillion, high-profile investors are allocating significant amounts toward Bitcoin. Notably, Strategy (formerly MicroStrategy) holds over 671,000 Bitcoins, valued at approximately $58.9 billion, and many other companies have similarly converted large sums into Bitcoin, including Tesla and various mining firms.
While institutional investment is rising, the absence of traditional banks among the largest Bitcoin holders remains striking. However, 2026 may present new opportunities, especially with the expected arrival of spot Bitcoin ETFs that could provide easier access for cash managers.
Currently, around 7% of circulating Bitcoins are held in ETF portfolios, a figure likely to rise as major financial institutions begin recommending Bitcoin investments to their clients. Additionally, with traditional safe havens like gold gaining substantial traction amidst economic uncertainty, Bitcoin’s potential to carve out a niche in this market becomes clearer.
However, this bullish outlook isn’t without its caveats. The influx of institutional investors has led to a stagnation in organic network growth. As ownership increasingly centralizes, the original vision of Bitcoin as a democratized financial instrument faces risks. Furthermore, Bitcoin miners are diversifying into AI computing, potentially straining resources that should be dedicated to mining.
The aspirational role of Bitcoin as a hedge remains theoretical, with past performance during economic downturns showing a different narrative. During the inflation crisis in 2022, while gold demonstrated its stability, Bitcoin experienced catastrophic losses, underscoring the unpredictable nature of the asset.
In considering an investment strategy for 2026, there are compelling arguments on both sides concerning Bitcoin’s potential. While there are risks associated with the asset’s inherent volatility, many see Bitcoin as a favorable long-term investment. A gradual increase in holdings, while maintaining a diversified portfolio, is a prudent approach, balancing exposure to new opportunities against the potential for downturns.
