Asset management firm Bitwise has published a new report asserting that bitcoin is set to diverge from its traditional four-year market cycle, with expectations of reaching new all-time highs in 2026, while also becoming less volatile and more distanced from stock market correlations.
Matt Hougan, Bitwise’s Chief Investment Officer, outlined three key predictions he believes are crucial for crypto investors: the conclusion of the four-year market cycle, ongoing reduction in volatility, and a decreasing correlation between BTC and conventional stock markets.
The four-year cycle is ‘substantially weakened’
Historically, bitcoin has adhered to a four-year cycle tied to the halving event, generally described by three years of growth followed by a significant downturn. Based on this pattern, 2026 would typically be anticipated as a down year.
Bitwise holds a contrary view.
“The dynamics that previously fueled four-year cycles — the BTC halving, interest rate shifts, and crypto’s leverage-driven booms and busts — are considerably weaker than in prior cycles,” Hougan stated.
He highlighted the diminishing effect of successive halvings, anticipated declining interest rates in 2026, and lowered systemic leverage following historic liquidations in October 2025. Improved regulatory clarity is also expected to mitigate the risks of substantial market disruptions.
Moreover, Bitwise forecasts an increase in institutional capital flows. With spot bitcoin ETFs authorized in 2024, the firm expects wider participation from major financial institutions like Morgan Stanley, Wells Fargo, and Merrill Lynch, alongside greater adoption by Wall Street and fintech companies amid a more favorable regulatory landscape post the 2024 U.S. elections.
Bitwise believes these elements could drive bitcoin to new all-time highs, effectively rendering the four-year cycle obsolete.
Bitcoin volatility continues to decrease
The firm also countered the persistent critique that BTC is too volatile for mainstream investors.
According to Bitwise, BTC exhibited less volatility than Nvidia stock throughout 2025, a comparison that Hougan states emphasizes the asset’s ongoing maturation. Data referenced in the report indicates that bitcoin’s volatility has consistently declined over the past decade as its investor demographic has broadened and traditional investment products like ETFs have increased accessibility.
Bitwise anticipates this trend to persist into 2026, comparing bitcoin’s development to gold’s shift following the introduction of gold ETFs in the early 2000s.
Reduced correlation with equities
Lastly, Bitwise predicts that BTC’s correlation with equities will diminish further in 2026. While critics often assert that bitcoin moves in sync with stocks, Hougan pointed out that the rolling 90-day correlations with the S&P 500 have seldom surpassed 0.50.
In the future, Bitwise expects crypto-specific catalysts—such as regulatory advancements and institutional acceptance—to propel bitcoin independently, even as equity markets contend with valuation issues and slowing economic expansion.
Overall, the firm anticipates that 2026 will be a promising year for bitcoin investors, marked by substantial returns, decreased volatility, and a reduced correlation with traditional assets.
“That’s the trifecta for investors,” Hougan remarked, adding that these trends could lead to tens of billions of dollars in new institutional inflows.
