As Bitcoin (BTC) steps into 2026, it finds itself buoyed by abundant global liquidity yet shadowed by investor apprehensions tied to the “halving cycle” concept.
Jim Ferraioli, who leads crypto research and strategy at the Schwab Center for Financial Research, explains that Bitcoin’s price behavior is influenced by a nuanced blend of enduring macroeconomic trends alongside specific market events.
Ferraioli identifies three core long-term drivers and seven short-term elements impacting Bitcoin’s trajectory. The long-term influences encompass shifts in the worldwide M2 money supply, Bitcoin’s capacity to withstand inflation coupled with its gradually diminishing issuance rate, and its expanding adoption across users. Meanwhile, short-term variables include investors’ risk tolerance levels, prevailing interest rates, fluctuations in the US dollar’s strength, seasonal patterns, surplus liquidity injected by central banks, holdings within large Bitcoin wallets, and risks stemming from financial contagion.
In early 2026 some of these short-run factors appear favorable for Bitcoin. Ferraioli points out that speculative derivative positions responsible for a steep sell-off near late 2025 have mostly unwound; credit spreads remain narrow as well. He comments that “the elevated risk appetite seen in equities benefits cryptocurrencies — often considered ultimate high-risk assets.” Additionally, he highlights how fresh expansions in global liquidity are lending further momentum to BTC.
The policies enacted by central banks may also serve as catalysts. With quantitative tightening having ceased and balance sheets beginning to expand anew, Ferraioli anticipates a decline in both interest rates and the US dollar throughout this year. These easing liquidity conditions are expected to underpin support for Bitcoin moving forward.
Nonetheless certain challenges persist. Adoption growth might decelerate during H1 2026 due to volatility experienced at the close of last year; however this could reverse if regulatory frameworks become clearer. According to Ferraioli: “The enactment of legislation like the Clarity Act could spark increased participation from bona fide institutional investors,” adding such laws would bolster confidence within crypto markets.
The psychological impact of halving cycles remains significant among market participants too. Historically speaking—the third year after a halving event tends toward weaker performance—and many investors adhering strictly to this pattern might exert downward pressure on prices during 2026. Yet when considering broader factors like money supply trends and liquidity flows over time,the overall outlook stays optimistic for BTC’s future value appreciation.
Ferraioli notes that since bottoming out around 2017,BTC has averaged roughly seventy percent annual gains—though this figure smooths out considerable volatility along the way.He expects positive returns again next year but foresees them falling notably below those historical averages.
An evolving relationship between Bitcoin and traditional financial assets is also emerging.Ferraioli forecasts reduced dependence on general macroeconomic indicators or conventional asset classes.In particular while correlations remain strong with major AI-focused tech stocks,the connection with broad stock indices appears steadily weakening.This shift impliesBitcoin may exhibit more independent price movements throughout 2026 onward than previously observed.
This content does not constitute investment advice.