Grayscale Investments is challenging the widely held belief that Bitcoin adheres to a predictable four-year cycle, suggesting that the cryptocurrency could reach new all-time highs in 2026. This assertion comes despite a recent market downturn that has erased a significant portion of the year's gains.
The "four-year cycle" theory links Bitcoin's price peaks and crashes to its halving schedule, which occurs approximately every four years and reduces the reward for mining new blocks. Historically, this halving has been followed by a bull run, then a subsequent correction.
However, Grayscale analysts argue that this pattern may no longer be relevant. In a report released this week, they presented three key arguments to support their claim. First, unlike previous cycles, the current market has not experienced a parabolic price surge indicative of an overbought market. Second, the industry's structure has evolved, with new capital primarily entering through Exchange Traded Products (ETPs) and corporate digital asset treasuries rather than retail exchanges. Third, the overall macroeconomic environment remains supportive of riskier assets like cryptocurrencies.
Grayscale analysts stated that while the outlook remains uncertain, they anticipate Bitcoin will "potentially make new highs next year" rather than repeat previous boom-bust patterns. They also noted that drawdowns of 25% or more are common during bull markets and do not necessarily signal a structural top. Bitcoin has faced significant volatility, dropping 32% from its peak since early October. On Monday, the price briefly reached $84,000 before rebounding to $86,909, reflecting the asset's price swings.
Tom Lee, CEO of BitMine, shares Grayscale's optimistic outlook, expecting Bitcoin to set a new all-time high by January 2026. Lee believes that improving fundamentals make the risk/reward "attractive".
Grayscale also pointed to signs that Bitcoin and other coins may have already bottomed. For example, the skew toward put options on BTC is very high, especially for three- and six-month positions, indicating that investors have actively hedged downside risks. The largest DATs also trade at a discount to the value of the cryptocurrency on their balance sheets, which may indicate modest speculative positioning that is often a precursor to recovery.
However, Grayscale also acknowledged some indicators still point to "cool" demand. Open interest in futures has continued to fall, and flows into exchange-traded products were negative through late November. Furthermore, early Bitcoin holders have increased selling.
Grayscale believes that regulatory clarity has driven a wave of institutional investment that will likely become the foundation for continued growth over the coming years. Despite uneven performance in crypto markets throughout 2025, Grayscale remains optimistic about the crypto market outlook into year-end and 2026, as fundamentals and valuation eventually converge.
