This article mainly discusses the role of Bitcoin and AI in the future economy and their impact on the risk asset market, predicting market trends for 2026.
Written by: Jordi Visser
Translated by: LlamaC
As the Bitcoin community fell into despair over its consolidation and weak performance relative to stocks, I wrote an article titled "The Silent IPO of Bitcoin," arguing that the consolidation of Bitcoin during the rebound of other assets was frustrating but not a weakness; rather, it was a necessary distribution phase. The early whales finally experienced their liquidity events, methodically selling their chips to the deep institutional buying created by ETFs and corporate treasuries. It was akin to the expiration of a lock-up period in a traditional IPO—an uncomfortable and torturous process, but ultimately healthy in the long run.
Today, the consolidation pattern has been broken. The distribution from the "Silent IPO" has led to a deeper pullback, while the stock market, led by retail-driven AI speculative stocks, has finally begun to correct. I emphasized this in my weekly video last weekend. This trend has turned Bitcoin's gains this year into a slight decline. The cognitive dissonance that once frustrated the crypto community has now evolved into genuine bearish sentiment and skepticism. The optimism of "Liberation Day" seems like a distant memory. Discussions about the end of the four-year cycle are growing louder. The narrative that "Bitcoin has lost its upside potential" echoes on the X platform, and those who once believed "this time is different" are now surrendering.
This fall, the CMC Cryptocurrency Fear and Greed Index has dropped to the same low level as around Liberation Day, at 15. All hope seems to have been shattered. Therefore, it is time to release "(Part Two)." For me, the core idea of this story is the same as Liberation Day. Every asset is driven by advancements in artificial intelligence, and I will continue to argue that all investors will eventually realize in the coming years that they missed a story. The purest AI story is Bitcoin.
Aside from their close birthdays—Bitcoin's white paper was born in 2008, while the 2009 Raina–Madhavan–Ng paper was the first influential study proving that GPUs could accelerate deep learning by over 70 times, effectively igniting the modern GPU-driven machine learning era—both are part of exponential innovation and are indispensable.
Exponential innovation reduces the necessity for people to work in offices or even work at all. Exponential innovation leads to unequal wealth distribution, forcing governments around the world to continue running deficits and driving financial assets higher as a form of universal basic income (UBI). Today's UBI does not come from government checks but rather from Universal Beta Income: your wealth grows because the system has no other choice. For those without assets, they will receive transfer payments as another form of UBI. This has created the K-shaped economy we have all heard about, along with the fear of job loss and wage pressure due to reduced employment, and inflation driven by government UBI, leading to widespread anger over the rising cost of living. Bitcoin benefits from this spiraling deterioration, remaining correlated with risk assets before AI begins to consume capitalism and public markets. The combination of stablecoins and AI agents increases the velocity of money and reduces the demand for leverage; tokenization allows concentrated dormant assets like real estate, private debt, private equity, and venture capital to trade freely 24/7, thereby reducing the leverage needed to support their prices. As AI advances, its deflationary pressures will become apparent. By 2026, AI drug discovery, autonomous taxis, and AI agents will contribute to rising prices due to increased margins and intensified competition brought about by commoditized intelligence.
And this is what makes this moment captivating: people once worried that Bitcoin was not keeping pace with the stock market during its rise, but now its performance finally aligns with expectations. As the stock market corrects, especially those AI concept stocks that have been driven by retail speculation, Bitcoin also declines in tandem. The divergence that confused everyone during the "Silent IPO" has disappeared. Bitcoin is once again trading as a risk asset, correlated with growth expectations and liquidity conditions. In my view, this will create the purchasing power and energy necessary to initiate a new upward trend.
This means that as I look ahead to the landscape of 2026, I see it again: the light at the end of the turmoil. Just as the tariff panic in April created buying opportunities for those who could see through the fear, this Bitcoin pullback—synchronized with the broader weakness in risk assets—is laying the groundwork for the next significant rally.
Why Bitcoin Rising with Stocks is a Bullish Signal
A long-standing misconception is that Bitcoin trading should be independent of traditional risk assets. This assertion posits that Bitcoin is digital gold, a hedge against the existing system, and unrelated to stocks. Therefore, if Bitcoin also declines when the stock market falls, something must be wrong.
This is incorrect. Bitcoin is a risk asset. I have written about this in my Substack article "Yes, Virginia, Bitcoin is a Risk Asset."
Yes, it has value storage properties. Yes, it is decentralized. But from the perspective of market psychology and capital flows, Bitcoin behaves like a high-beta risk asset. ETF buyers allocate Bitcoin alongside stocks, and when they hedge their portfolios, Bitcoin is sold off with stocks. Retail traders use the same funds for cryptocurrency and stock trading. Even those concerned about currency devaluation will be more aggressive in accumulating during periods of strong economic performance and healthy cash flow.
Thus, when the Nasdaq index falls, Bitcoin also falls. When AI stocks are hit, Bitcoin is also impacted. This is not a flaw but a feature. Given its holder base, Bitcoin's performance is rational.
This is the bullish reason: if Bitcoin moves in tandem with risk assets, then Bitcoin's outlook is closely tied to the outlook for risk assets. This means that to understand Bitcoin's future, we need to understand the future direction of the stock market.
Let me tell you why I am extremely optimistic about the performance of risk assets before 2026.
The 2026 Landscape: The Convergence of Fiscal, Monetary, and AI
The market is climbing amid worries. Today, this wall of worry is built by the AI bubble, recession fears, and pessimism in cryptocurrency. Yet the outlook for 2026 remains compelling.
Fiscal support continues. The Infrastructure Bill, the Chips Act, and the Inflation Reduction Act are not just empty promises; they are multi-trillion-dollar spending plans creating real economic activity and deficits. This "big and beautiful" package has been rolled out ahead of the midterm elections. Data centers are being built at an unprecedented pace, semiconductor plants are rising, and power infrastructure is being upgraded.
The Federal Reserve has room to cut rates. Inflation is now under control. This year, wages, housing, and oil prices have been under pressure, so as the effects of tariffs become apparent, inflation should remain manageable relative to the weakness in the labor market. AI is both a deflationary force and a force that weakens labor.
Breakthroughs in AI are imminent. Over the past year, the pace of AI development has been astonishing. We are about to see tangible, real-world breakthroughs that can attract mainstream attention:
AI Drug Discovery: The first drugs discovered by AI are nearing clinical trial stages. Once we receive positive news in this area, the impact on healthcare and economic productivity will be staggering. In terms of performance since November, pharmaceutical stocks are experiencing one of their best relative months in 30 years. Every pharmaceutical company will compete to integrate AI into R&D. Billions of dollars will flow into AI healthcare.
Autonomous Vehicles: After years of "five-year promises," we are at a turning point. Waymo is expanding. Tesla's FSD continues to improve. Chinese companies are deploying autonomous taxis on a large scale. When autonomous vehicles become mainstream in major cities by 2026, speculation about humanoid robots will explode.
AI Agents and Productivity: AI agents capable of autonomously executing complex tasks will begin to be ubiquitous across enterprise software, customer service, and creative industries. The impact on productivity will be immense, expanding profit margins across the economy. AI is making every industry more efficient, productive, and profitable.
Manufacturing is expanding. The construction of AI infrastructure is driving a revival in U.S. manufacturing. After years of contraction, manufacturing is showing signs of recovery. I believe that driven by the aforementioned catalysts, the Purchasing Managers' Index (PMI) for 2026 will rise. Historically, when the PMI rises, cryptocurrencies, especially altcoins, perform exceptionally well.
Bears will shout "AI bubble!" Maybe. But the duration of bubbles and the heights they reach always exceed everyone's expectations. The internet bubble did not peak when valuations first appeared crazy in 1997, but rather peaked three years later in March 2000. From the end of 1994 to the end of 1999, the Nasdaq 100 index, known as QQQ, rose 800%. Yet QQQ has risen less than 100% in the past five years. Compared to the internet bubble, this hardly qualifies as a bubble. If we are indeed in an AI bubble, it is only in the early to mid-stages. The mainstream public has not fully entered the market yet. Your relatives are not yet asking about AI stocks at the Thanksgiving dinner table. That will come later, and I believe in cryptocurrency.
And the bursting of a bubble requires a catalyst, usually the Federal Reserve taking aggressive tightening measures during economic weakness. But the Fed has completed its tightening. They may start cutting rates in 2026 instead of initiating a new tightening cycle. Therefore, the typical catalyst is absent.
Bitcoin's 2026 Catalysts
If risk assets perform strongly in 2026, then as a high-beta risk asset, Bitcoin's performance should significantly outperform the broader market. But there are also some Bitcoin-specific catalysts that make its outlook even more compelling.
The Clarity Act: For years, regulatory uncertainty has weighed on the development of cryptocurrency. The Clarity Act is expected to pass by the end of 2025 or early 2026, providing a clear regulatory framework, establishing clarity of jurisdiction, and eliminating the legal ambiguities that deter institutional investors. Those who have been saying "we are waiting for regulatory clarity," including some of the largest asset management firms and pension funds, will finally gain permission to allocate assets. Compared to the upcoming influx of funds, the ETF inflows we currently see will seem trivial.
Tokenization is scaling: Major financial institutions are tokenizing treasury bills, real estate, commodities, and stocks. JPMorgan, BlackRock, Franklin Templeton, and others are building tokenization platforms. This validates the value of the entire crypto infrastructure and proves that blockchain is not just for digital gold. As tokenization scales and dormant assets begin to trade around the clock with lower leverage requirements, Bitcoin's role as a neutral settlement asset—like TCP/IP in digital finance—will become increasingly prominent.
The Accelerated Development of Stablecoins: The Most Underestimated Bullish Factor. The adoption of stablecoins is experiencing explosive growth globally, especially in developing countries. Tether and USDC are becoming the dollar payment channels for most economies worldwide. When someone in Nigeria receives a USDC payment instead of naira, when a business in Argentina holds stablecoins denominated in dollars instead of pesos, and when cross-border payments are made through stablecoins instead of correspondent banks, the crypto infrastructure becomes an indispensable part of global commerce.
Stablecoins and Bitcoin are not in competition; they form a two-part system. Stablecoins serve as the medium of exchange in the digital economy, while Bitcoin acts as its store of value. As more activities and funds flow into the digital economy, an increasing share will naturally flow into Bitcoin. You can think of stablecoins as the M2 of the digital world, while tokenization serves as the bridge to bring traditional fiat assets into this system. This creates a powerful network effect: the adoption of stablecoins brings millions of new users into the crypto space, and these users will eventually need a place to store value long-term after exiting stablecoins. Bitcoin becomes the default choice. The network effects driven by the growth of stablecoins will accelerate the adoption of Bitcoin in a way that is difficult to model but obvious.
History Repeats Itself
Decades of market experience have taught me one thing: initial lows are often tested again. We saw this in April when the market bottomed out and then began to rise only after testing the lows again. This is a normal and healthy pattern, as the market needs to build support and wash out weak investors in the process.
I expect Bitcoin may follow a similar pattern. We may have reached an initial low, but it is likely we will test it again in the coming weeks. As the last batch of weak investors capitulates, another wave of selling may occur. There might even be a final washout that briefly pushes Bitcoin to lower levels.
If a second bottom does occur, it will present the best investment opportunity of the year. Because during a second bottom, something happens: the smart money that missed the first bottom will get a second chance. A second bottom characterized by shrinking volume and diminishing panic will confirm that the initial low is indeed the true bottom. I will not wait for the second bottom to arrive. I believe that for both Bitcoin and stocks, the current area is an excellent opportunity to capitalize on market fear when the greed index is extremely low.
Bitcoin has seen a decline this year. The sell-off from early holders (OGs) from the "Silent IPO" may not be over, but it has entered its later stages. Ownership is more dispersed than ever. Retail investor sentiment is pessimistic, holding onto their coins and waiting. ETF buyers are patiently accumulating. Those who bought to hedge against fiat devaluation are continuing to accumulate systematically. Developing countries are steadily adopting Bitcoin as part of their financial infrastructure.
Meanwhile, the outlook for 2026 looks exceptionally bright. Fiscal support will continue. Monetary policy will provide tailwinds. Breakthroughs in artificial intelligence will drive speculation and actual profit growth. Manufacturing is expanding. The Clarity Act will bring regulatory certainty. Tokenization is scaling. Stablecoins are accelerating network effects.
Bitcoin's trajectory is aligned with risk assets. Risk assets are expected to perform strongly in 2026. Therefore, Bitcoin is also expected to perform strongly in 2026.
The Light is There
I always think back to Liberation Day. At that time, the S&P 500 index had fallen 20%, economists predicted a recession, and people were panic selling. Yet I believed that looking back six months later, we would find that the panic was entirely unnecessary. It turned out I was right.
Today, I feel the same way about Bitcoin. Yes, this pullback is painful. Yes, market sentiment is very poor. The fear and greed index is at 15, matching the lows of Liberation Day. But pullbacks in a bull market always feel like the end of the world. Each pullback seems different from the last. They always manage to convince people that the rally is over.
For those who can see through the fear, it is always a buying opportunity.
In my trading career, I have experienced enough crises—Mexico in 1994, Brazil in 1998, the Global Financial Crisis (GFC), the COVID-19 pandemic, and Liberation Day—so I know that these moments, while unsettling, are not nearly as terrifying as they appear. One truth stands out: if you can see through the fear, these periods provide the best investment opportunities.
Bitcoin has not collapsed, and digital assets will not disappear. Everything happening now makes sense: a maturing risk asset is still recovering from the winter of 2022. During the current uncertainty and position adjustments, it is pulling back alongside other risk assets. Unlike in April, this pullback is narrower, primarily concentrated in growth stocks and cryptocurrencies, rather than widespread market panic. This is a healthier state, indicating that the market is differentiating. It also means that when recovery comes, it may be more rapid and concentrated.
For those who can see the opportunity, now is the time to accumulate. Not recklessly, not with leverage, and not with money you can't afford to lose. But thoughtfully, based on fundamentals rather than market sentiment, and taking action decisively.
In an era where AI drives investment alpha, the market will be turbulent. Given the difficulties governments face in navigating this disruptive force, there will be some thrilling moments ahead. Doubts will arise, and headlines about crashes and bear markets will flood in. Ignore them and focus on the fundamentals. AI is the most important and powerful innovation of our lifetime, and it will bring better days in the coming years.
When everyone sees the light, it will be too late to enter. Now is the opportunity for cryptocurrency, with the fear and greed index at just 15, the crowd is surrendering, and the tunnel remains dark.
Six months from now, just like Liberation Day, the narrative surrounding Bitcoin will be entirely different. When we look back at the current prices and market sentiment, we will inevitably wonder why we ever doubted.
The light is there. You just need to be willing to see it.
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