Schwab Sees Bitcoin Supported by Liquidity but Halving Cycle Fears Cloud 2026 Outlook
Bitcoin’s (BTC $91,452.15) price is being shaped by a mix of macro trends and market-specific factors as 2026 begins, according to Jim Ferraioli, director of crypto research and strategy at the Schwab Center for Financial Research.
Ferraioli identifies three long-term drivers—global M2 money supply, Bitcoin’s disinflationary supply growth, and adoption—alongside seven short-term factors, including market risk sentiment, interest rates, U.S. dollar strength, seasonality, central bank excess liquidity, the supply of large Bitcoin wallets, and financial contagions.
Several of these short-term variables currently favor Bitcoin. Credit spreads remain tight, and much of the speculative derivative exposure that fueled late-2025 volatility has already been flushed out. “A risk-on environment in equities should be supportive of crypto—the ultimate risk asset,” Ferraioli noted.
Monetary policy could also provide a tailwind. With quantitative tightening concluded and balance sheet expansion resuming, Ferraioli expects rates and the dollar to trend lower, adding liquidity to the market.
Still, challenges remain. Adoption may slow in early 2026 following last year’s sharp volatility, though Ferraioli sees potential for improvement if regulatory clarity emerges. “Passage of the Clarity Act could accelerate adoption among institutional investors,” he said.
The halving cycle also presents a headwind. Historically, the third year of the cycle has been weak, and many crypto investors follow this framework, which could temper gains. Since 2017, Bitcoin has typically risen around 70% from its annual low, though 2026 returns are expected to fall short of that historical average.
Ferraioli also highlighted a shift in Bitcoin’s correlations. While still tied to megacap AI stocks, its link to broader equity indexes has been weakening, suggesting the crypto may become less influenced by traditional markets and macro factors in the year ahead.
