Wintermute says crypto’s 2026 outlook hinges on three outcomes
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Bitcoin’s performance in 2025 fell short of prior cycle patterns, with gains failing to extend meaningfully to altcoins. Market maker Wintermute said this reflects a structural shift rather than a brief pause, adding that any broad recovery in 2026 will depend on several uncertain catalysts.
In its digital asset OTC market review, Wintermute reported that the long-observed “recycling” dynamic — where advances in Bitcoin (BTC) and Ether (ETH) typically rotated into altcoins — broke down in 2025.
Liquidity instead clustered around a limited set of large-cap assets, supported primarily by exchange-traded funds (ETFs) and institutional allocations. This produced narrower market breadth and wider performance dispersion, indicating that capital rotated selectively rather than across the broader market.
The introduction of US spot Bitcoin ETFs has tilted digital asset markets toward institutions. Source: Wintermute
Wintermute said evidence from 2025 suggests the traditional four-year cycle is losing relevance. The firm noted that altcoin rallies averaged roughly 20 days, down from around 60 days the year before, with only a limited number of tokens outperforming while much of the market trended lower under the weight of token unlock overhangs.
According to Wintermute, improved conditions in 2026 likely require at least one of three developments: ETFs and digital asset treasury managers broaden their mandates beyond Bitcoin and Ether; major assets deliver another strong leg higher that creates a wealth effect; or retail investor interest returns from other areas, including artificial intelligence, equities and commodities.
Competition for retail attention intensifies
Re-engaging retail participation may be challenging. Institutional flows have become a larger driver of Bitcoin’s price, while memories of the 2022–2023 downturn — characterized by steep drawdowns, notable bankruptcies and forced liquidations — remain a factor.
At the same time, investors have had access to alternative opportunities offering stronger returns.
In 2025, Bitcoin and Ether generally trailed traditional equity benchmarks, particularly high-growth themes such as space, artificial intelligence, robotics and quantum computing, further reducing crypto’s appeal for investors seeking outsized gains.
Retail investors remain active, but are increasingly dollar-cost averaging into the S&P 500 and allocating to other high-growth themes, including AI, robotics and quantum computing. Source: Wintermute
Some market participants contend that retail’s return depends more on macroeconomic conditions. Clear Street managing director Own Lau said renewed engagement is likely linked to how aggressively the US Federal Reserve cuts interest rates, which would lower the cost of capital and support risk appetite. Lau described rate cuts as “one of the key catalysts for the crypto space in 2026.”
Futures markets currently imply roughly two rate cuts this year, according to the CME Group’s FedWatch Tool.
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