Asset manager Bitwise released a new report that argues that bitcoin is poised to break from its historical four-year market cycle, setting new all-time highs in 2026 while becoming less volatile and less correlated with equities.
Bitwise’s Chief Investment Officer Matt Hougen outlined three forecasts he says matter most for crypto investors: the end of the four-year cycle, continued volatility compression, and declining correlation between BTC and traditional stock markets.
The four-year cycle is ‘significantly weaker’
Bitcoin has historically followed a four-year pattern tied to the halving cycle, typically marked by three years of gains followed by a sharp pullback. Under that framework, 2026 would be expected to be a down year.
Bitwise disagrees.
“The forces that previously drove four-year cycles — the BTC halving, interest rate cycles, and crypto’s leverage-fueled booms and busts — are significantly weaker than they’ve been in past cycles,” Hougan wrote.
He pointed to the diminishing impact of successive halvings, expectations for falling interest rates in 2026, and reduced systemic leverage following record liquidations in October 2025. Improving regulatory clarity is also expected to lower the risk of major market blow-ups.
More importantly, Bitwise expects institutional capital flows to accelerate. With spot bitcoin ETFs approved in 2024, the firm anticipates broader participation from major wealth platforms such as Morgan Stanley, Wells Fargo, and Merrill Lynch, alongside increased adoption from Wall Street and fintech firms amid a more favorable regulatory environment following the 2024 U.S. election.
Bitwise believes these factors could push bitcoin to fresh all-time highs, effectively ending the relevance of the four-year cycle.
Bitcoin volatility continues to decline
The firm also challenged the long-standing criticism that BTC is too volatile for mainstream investors.
According to Bitwise, BTC was less volatile than Nvidia stock throughout 2025, a comparison Hougan says underscores the asset’s ongoing maturation. Data cited in the report shows bitcoin’s volatility has steadily declined over the past decade as its investor base has diversified and traditional investment vehicles like ETFs have expanded access.
Bitwise expects that trend to continue into 2026, likening bitcoin’s evolution to gold’s transition following the launch of gold ETFs in the early 2000s.
Lower correlation with equities
Finally, Bitwise predicts BTC’s correlation with stocks will fall further in 2026. While critics often claim bitcoin trades in lockstep with equities, Hougan noted that rolling 90-day correlations with the S&P 500 have rarely exceeded 0.50.
Looking ahead, Bitwise expects crypto-specific catalysts—such as regulatory progress and institutional adoption—to drive bitcoin independently, even as equity markets grapple with valuation concerns and slowing economic growth.
Taken together, the firm sees 2026 shaping up as a favorable year for bitcoin investors, characterized by strong returns, lower volatility, and reduced correlation with traditional assets.
“That’s the trifecta for investors,” Hougan wrote, adding that these dynamics could drive tens of billions of dollars in new institutional inflows.
