Bitcoin’s recent pullback may be nearing its bottom, with asset manager Grayscale suggesting the market is positioned to break the traditional four-year halving cycle and could reach new all-time highs in 2026.
Signs of a local bottom are emerging, including Bitcoin’s elevated option skew rising above 4, indicating that investors have already hedged heavily against further downside.
Despite a 32% drop, Grayscale noted in a Monday research report that Bitcoin remains on track to defy the usual four-year cycle. “While the outlook remains uncertain, we believe the four-year cycle thesis may not hold, and Bitcoin’s price could potentially reach new highs next year,” the report stated.
Bitcoin’s short-term rebound may remain constrained until key flow indicators show signs of reversal, including futures open interest, ETF inflows, and selling by long-term Bitcoin holders.
US spot Bitcoin ETFs—one of the primary drivers of the asset’s momentum in 2025—exerted notable downward pressure in November, recording $3.48 billion in net outflows, marking their second-worst month on record, according to Farside Investors.
Recently, the trend appears to be shifting. US spot Bitcoin ETFs have recorded four consecutive days of inflows, including a modest $8.5 million on Monday, signaling that ETF buyer demand is gradually returning after the recent sell-off.
“Market positioning points to a leverage reset rather than a sentiment break,” Iliya Kalchev, dispatch analyst at digital asset platform Nexo, told Cointelegraph. The key question, he noted, is whether Bitcoin can “reclaim the low-$90,000s to avoid sliding toward mid-to-low-$80,000 support.”
Fed policy and US crypto legislation emerge as 2026 catalysts
Crypto observers are now eyeing the largest potential market mover: the US Federal Reserve’s interest rate decision on Dec. 10. The Fed’s action and accompanying guidance are expected to serve as a major catalyst for 2026, according to Grayscale.
Markets currently price in an 87% probability of a 25-basis-point rate cut, up from 63% a month ago, according to the CME Group’s FedWatch tool.
Looking ahead to late 2026, Grayscale highlighted that progress on the Digital Asset Market Structure bill could serve as a key catalyst for boosting “institutional investment in the industry.” For meaningful advancement, however, crypto must remain a “bipartisan issue” rather than becoming a partisan topic ahead of the midterm US elections.
This effort began with the passage of the CLARITY Act in the House of Representatives, which advanced in July as part of the Republicans’ “crypto week” agenda. Senate leaders have indicated plans to expand on the House bill through the Responsible Financial Innovation Act, aiming to create a broader framework for digital asset markets.
The legislation is currently under review by the Republican-led Senate Agriculture Committee and Senate Banking Committee. Senate Banking Chair Tim Scott stated in November that the committee intends to have the bill ready for signing into law by early 2026.
