The anticipated resurgence of cryptocurrencies by 2026 is contingent upon three key developments, as outlined by crypto market maker Wintermute. The subdued Bitcoin rally in 2025, coupled with a decline in the altcoin cycle, indicates a significant market transformation. This shift suggests that any recovery in the coming years will rely heavily on institutional involvement, interest rate adjustments, and the return of retail investors.
In its analysis of the digital asset OTC market, Wintermute highlighted a departure from the historical market trend where gains in Bitcoin (BTC) and Ether (ETH) would spark extended rallies in altcoins. In 2025, liquidity was primarily concentrated in a few large-cap assets, largely influenced by exchange-traded funds (ETFs) and institutional investments. This resulted in reduced market breadth and increased performance divergence, pointing to a more selective capital allocation within the crypto market.
The launch of U.S. spot Bitcoin ETFs has notably steered digital asset markets towards institutional players. While discussions continue about the potential weakening or transformation of Bitcoin’s traditional four-year cycle, Wintermute suggests that predicting the market’s direction in 2026 remains challenging.
"The evidence from 2025 suggests that the traditional four-year cycle is becoming less relevant," Wintermute stated. The company noted that altcoin rallies were significantly shorter, averaging just 20 days compared to the previous 60 days. Only a handful of tokens outperformed, while the broader market remained under pressure due to token unlocks.
For a positive shift in 2026, Wintermute proposes that one of three scenarios must unfold: expansion of ETF and digital asset treasury mandates beyond Bitcoin and Ether, a strong performance from major assets that could trigger a wider wealth effect, or a renewed interest from retail investors. Currently, retail attention is diverted towards sectors like artificial intelligence, equities, and commodities.
The path to re-engaging retail investors in crypto is fraught with challenges. Institutional activities have predominantly driven Bitcoin's price increases, and the memories of the steep losses and bankruptcies during the 2022–2023 bear market are still vivid.
In 2025, Bitcoin and Ether underperformed compared to traditional equity markets, especially in high-growth sectors such as space technology, AI, robotics, and quantum computing. This has weakened crypto’s allure for individual investors who are increasingly investing in the S&P 500 and other high-growth themes.
Some industry experts believe that the return of retail investors to crypto hinges more on macroeconomic factors than on market narratives. Own Lau, managing director at Clear Street, suggests that the U.S. Federal Reserve’s approach to interest rate cuts could be pivotal. A reduction in interest rates could lead to a more favorable capital environment and increased risk appetite.
"Rate cuts by the Fed are one of the key catalysts for the crypto space in 2026," Lau pointed out. Current market predictions, according to the CME Group’s FedWatch Tool, suggest approximately two rate cuts this year.