Asset manager Bitwise released a new report arguing that bitcoin is poised to break from its historic four-year market cycle and set new records in 2026, while becoming less volatile and less correlated with stocks.
Bitwise’s Chief Investment Officer Matt Hougen outlined three forecasts he says matter most to 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 characterized by three years of gains followed by a sharp pullback. Under that framework, 2026 is expected to be a downward year.
Bitwise disagrees.
“The forces that previously drove four-year cycles — the BTC halving, interest rate cycles, and crypto’s leverage-driven booms and busts — are significantly weaker than they have been in previous cycles,” Hougan wrote.
He pointed to the diminishing effect of successive halvings, expectations of falling interest rates in 2026 and reduced systemic leverage following record liquidations in October 2025. Improving regulatory clarity is also expected to reduce 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 expects broader participation from major wealth platforms such as Morgan Stanley, Wells Fargo and Merrill Lynch, along with increased adoption by Wall Street and fintech firms amid a more favorable regulatory environment following the 2024 US election.
Bitwise believes these factors could push bitcoin to new record highs, effectively ending the relevance of the four-year cycle.
Bitcoin volatility continues to decrease
The firm also challenged the longstanding criticism that BTC is too volatile for ordinary 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 show that bitcoin’s volatility has fallen steadily over the past decade as its investor base has diversified and traditional investment vehicles such as ETFs have widened access.
Bitwise expects this trend to continue into 2026, comparing bitcoin’s evolution to gold’s transition after the launch of gold ETFs in the early 2000s.
Lower correlation with stocks
Finally, Bitwise predicts that BTC’s correlation with stocks will fall further in 2026. While critics often claim that bitcoin trades in lockstep with stocks, 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 propel bitcoin independently, even as equity markets struggle with valuation concerns and slowing economic growth.
Taken together, the firm sees 2026 shaping up to be a favorable year for bitcoin investors, characterized by strong returns, lower volatility and reduced correlation with traditional assets.
“It’s the trifecta for investors,” Hougan wrote, adding that this dynamic could drive tens of billions of dollars in new institutional approaches.