Structural forces are emerging as the dominant influence on digital asset markets. Algorithmic trading firm and market maker Wintermute shared research insights on Jan. 19 on social media platform X, explaining why crypto’s four-year cycle is fading and identifying the specific mechanisms it expects to drive prices in 2026.
The firm stated:
“The traditional four-year cycle is becoming obsolete. Market performance is no longer dictated by self-fulfilling timing narratives, but by where liquidity flows and investor mindshare concentrates.”
The post directed readers to Wintermute’s report, titled “Digital asset OTC market 2025,” which was released on Jan. 13 and examined how market behavior in 2025 diverged from expectations of a broad post-halving rally. Drawing on over-the-counter flow data, the research outlined how crypto-native capital previously behaved as a rotating pool, with gains moving from bitcoin into ethereum and then into major tokens and altcoins. That transmission weakened materially during 2025 as exchange-traded funds (ETFs) and digital asset trusts absorbed sustained inflows without recycling capital across the wider market. The analysis described these vehicles as effectively closed systems, supporting persistent demand for a narrow set of large-cap assets while reducing participation and price responsiveness elsewhere.
Read more: Bitcoin’s Four-Year Cycle Isn’t Dead — Research Reveals Bear, Gradual Decline Ahead
Against that backdrop, Wintermute detailed three forces it expects to shape pricing dynamics in 2026. The first involves whether ETFs and digital asset trusts broaden their mandates beyond a small group of majors, allowing institutional liquidity to reach additional assets, with early solana and XRP filings highlighted as initial signals. The second factor centers on performance from bitcoin or ethereum, as a strong rally in either could recreate a wealth effect similar to 2024 and encourage capital to extend further out the risk curve. The third driver focuses on investor attention, particularly whether retail interest rotates back from equities tied to artificial intelligence, rare earths, and quantum computing into crypto, supporting new stablecoin issuance and broader market engagement.
Wintermute emphasized that these forces will determine whether concentration eases or persists, concluding:
“Outcomes will depend on whether one of these catalysts meaningfully broadens liquidity beyond a handful of large-cap assets, or whether concentration persists. Understanding where capital can flow and what structural changes are needed will determine what works in 2026.”
The report frames liquidity access, major-asset performance, and investor mindshare as the primary levers expected to influence crypto pricing next year.
- Why is the four-year crypto cycle losing relevance?
Wintermute says liquidity concentration and institutional capital flows now outweigh predictable halving-driven timing narratives. - How did ETFs and trusts impact crypto markets in 2025?
These vehicles absorbed capital into closed systems, sustaining demand for major assets while limiting spillover to altcoins. - What happened to altcoin rallies in 2025?
Altcoin rallies shortened to about 20 days on average as large-cap assets captured most new inflows. - What could broaden crypto liquidity in 2026?
Wintermute points to expanded ETF mandates, stronger bitcoin or ethereum performance, or renewed retail-driven stablecoin issuance.
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