Asset manager Bitwise has released a comprehensive report suggesting that Bitcoin may deviate from its traditional four-year market cycle, anticipating new all-time highs in 2026 while simultaneously becoming less volatile and more independent from equities. Matt Hougan, the Chief Investment Officer of Bitwise, presented three crucial forecasts that he asserts are vital for cryptocurrency investors: the end of the four-year cycle, continued compression of volatility, and a declining correlation between Bitcoin (BTC) and traditional stock markets.
Historically, Bitcoin has followed a predictable four-year pattern, often aligned with its halving cycle. This framework typically features three years of price gains followed by a significant market downturn. Against this backdrop, 2026 would traditionally be viewed as a bearish year; however, Bitwise challenges this notion. Hougan noted that the driving forces behind these cycles, including the halving events, interest rate dynamics, and leverage-driven market fluctuations, have considerably diminished in recent times. He highlighted the waning influence of successive halvings, anticipated declining interest rates in 2026, and reduced systemic leverage following substantial liquidations in October 2025. Additionally, improving regulatory clarity is expected to mitigate the risk of major market collapses.
Bitwise also predicts a surge in institutional capital inflow, especially with the approval of spot Bitcoin exchange-traded funds (ETFs) in 2024. This regulatory advancement is likely to facilitate broader participation from major financial institutions such as Morgan Stanley, Wells Fargo, and Merrill Lynch, as well as increasing engagement from Wall Street and fintech companies in a more favorable regulatory landscape post the 2024 U.S. elections. These converging factors could potentially propel Bitcoin to new all-time highs, thereby diminishing the significance of the historical four-year cycle.
The report further addresses the ongoing critique surrounding Bitcoin’s volatility, asserting that it is no longer too erratic for mainstream investors. Bitwise highlighted that BTC exhibited less volatility than Nvidia stock throughout 2025, a comparison that Hougan contends illustrates the maturation process of digital assets. Historical data indicates that Bitcoin’s volatility has steadily decreased over the past decade as its investor base has diversified, and access through traditional investment vehicles like ETFs has broadened. Bitwise expects this trend of volatility reduction to persist into 2026, drawing parallels to gold’s trajectory following the introduction of gold ETFs in the early 2000s.
Another significant prediction from Bitwise is the anticipated decline in Bitcoin’s correlation with equities. Critics frequently assert that Bitcoin tends to move in tandem with stock markets, yet Hougan pointed out that the rolling 90-day correlations with the S&P 500 have rarely surpassed 0.50. Looking forward, Bitwise expects industry-specific catalysts—such as regulatory advancements and increased institutional adoption—to drive Bitcoin’s performance independently, despite broader equity markets facing valuation issues and slowing economic growth.
In summary, Bitwise forecasts 2026 to be an exceptionally promising year for Bitcoin investors, marked by robust returns, diminished volatility, and a lesser correlation with traditional financial assets. Hougan encapsulated the sentiment by stating that these dynamics could stimulate tens of billions of dollars in new institutional inflows, creating what he referred to as “the trifecta for investors.”
