The 12 months 2025 proved disappointing for a lot of cryptocurrency investors as Bitcoin's traditional four-year cycle resulted in a more muted rally, although this didn’t impact the broader altcoin market. According to crypto market maker Wintermute, the shift reflects a structural shift reasonably than a brief pause, leaving a recovery in 2026 depending on several uncertain aspects.
In his review of the OTC digital asset market, Wintermute said the market's long-standing “recycling” pattern, during which gains in Bitcoin (BTC) and Ether (ETH) flowed into altcoins and fueled prolonged, narrative rallies, collapsed in 2025.
Instead, liquidity has been concentrated in a small group of large-cap assets, largely driven by exchange-traded funds (ETFs) and institutional inflows. The result was reduced market breadth and greater divergence in performance, suggesting that capital became more selective reasonably than spread broadly across the market.
The launch of US spot Bitcoin ETFs has shifted digital asset markets towards institutions. Source: Wintermute
While the controversy continues over whether Bitcoin's four-year cycle is weakening or has fundamentally modified, Wintermute argued that the outlook for 2026 is way less predictable.
“The 12 months 2025 provided evidence that the normal four-year cycle is becoming obsolete,” Wintermute said, adding:
“Market breadth has narrowed significantly, with altcoin rallies lasting around 20 days on average, in comparison with around 60 days last 12 months. Only a small variety of tokens outperformed, while the broader market continued to weaken under pressure from token unlock overhangs.”
For conditions to enhance in 2026, Wintermute says not less than considered one of three developments would wish to occur: ETFs and digital asset treasury firms expanding their mandates beyond Bitcoin and Ether; Major assets are once more posting strong performance, which might create a broader wealth effect. or the eye of retail investors, which is currently focused on artificial intelligence, stocks and commodities.
The battle for mindshare is heating up
It won't be easy to get private investors enthusiastic about crypto again. Institutional participation has played an increasingly necessary role in driving the worth of Bitcoin higher, while memories of the 2022-2023 bear market – which was marked by steep losses, high-profile bankruptcies and compelled liquidations – are still fresh.
At the identical time, investors have noted no shortage of different options with higher returns.
In 2025, Bitcoin and Ether lagged far behind traditional stock markets, especially in high-growth segments similar to space, artificial intelligence, robotics and quantum computing. This relative underperformance has further diminished the attractiveness of cryptocurrencies for individual investors looking for outsized gains.
Retail investors remain energetic, but are increasingly investing within the S&P 500 and investing in other high-growth themes, including AI, robotics and quantum computing. Source: Wintermute
Some industry observers argue that retail's return to crypto depends less on the narrative and more on macroeconomic conditions.
Own Lau, managing director of Clear Street, said renewed participation likely depends upon how aggressively the Federal Reserve cuts rates of interest, resulting in a more favorable capital environment and greater risk appetite.
Fed rate cuts are “considered one of the important thing catalysts for the crypto space in 2026,” Lau said.
Markets currently expect about two rate cuts this 12 months, in accordance with CME Group's FedWatch tool.
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