Bitcoin will 2026 following a sharp late-2025 correction driven by forced liquidations and ETF outflows, but leverage and volatility have since normalized.
Post-halving supply constraints, declining exchange reserves, and more BTC locked in long-term holdings are creating a structurally tighter market as global liquidity conditions slowly improve.
Bitcoin’s 2026 outlook hinges on whether improving macro conditions can outweigh correction risks and reignite a sustained uptrend
After a turbulent end to 2025, Bitcoin will enter 2026 at a critical inflection point. More than $1.2 trillion was wiped off the total crypto market capitalization within six weeks, as Bitcoin (BTC) fell over 30%, briefly slipping below $82,000 amid aggressive deleveraging, ETF outflows, and low liquidity.
The selloff in late 2025 was characterized by forced liquidations and institutional de-risking. At its height, $19 billion was liquidated in crypto positions in a single day.
Leverage has since come down to normal levels, volatility has reduced significantly, and the liquidity conditions are getting back to normal.
The macro conditions are also changing. There is a decline in inflation, growth is slowing, and the central banks are either approaching or already in their rate-cut cycles.
Historically, Bitcoin has performed better during the periods when real yields have fallen and liquidity has improved. This is because the opportunity cost of holding non-yielding assets declines.
The impact of Bitcoin's 2024 halving has manifested completely. The reduction of miner issuance by half has resulted in the consolidation of the less efficient operators.
According to CryptoQuant, the exchange reserves are at the lowest level since 2018, implying there is a decrease in the sell-side pressure.
The growth in the portion of BTC supply is now locked in long-term wallets, ETFs, and corporate treasuries, leading to a reduction in the circulating supply. While this is not yet a full supply shock, it has caused the market to become structurally tighter.
Institutional demand cooled as spot Bitcoin ETFs saw consecutive outflows.
In the past week, institutional demand has weakened as spot Bitcoin Exchange-Traded Funds (ETFs) recorded their fifth consecutive day of withdrawals with $175.29 million in outflow on December 24.
However, the broader picture remains constructive, as over $50 billion flowed into spot BTC ETFs during the year.
Large holders such as Strategy continue to retain substantial BTC reserves, effectively acting as long-term supply sinks rather than short-term sellers.
The Bitcoin price retested the $90,000 level on Monday and declined slightly the following day.
As of today, BTC hovers around $89,000. If BTC continues its correction, it could extend the decline toward the key support at $85,569.
The Relative Strength Index (RSI) is 48.86, below its neutral level of 50, indicating that bearish momentum is still there.
The Moving Average Convergence Divergence indicator showed a bullish crossover last week; however, the falling green histogram bars indicate fading bullish momentum.
QCP Capital’s report highlighted that although leveraged positioning has come down, the contraction in market depth means squeeze risk in either direction remains elevated.
“Historically, BTC has tended to experience 5 to 7% swings during the Christmas period, a pattern often linked to year-end options expiries rather than fresh fundamental catalysts,” said QCP’s analyst.
Nearly $23.5 billion in BTC options are set to expire, increasing the risk of sharp price swings.
In 2022, Bitcoin rallied from $22,000 to around $126,500 in 2025, which is what analysts see as the completion of a five-wave advance under Elliott Wave theory.
Should this scenario turn out to be true, the recent drop in price might be viewed as the start of an early corrective extending until mid-2026.
Key downside levels to monitor are $84,000, $70,000, and $58,000; these levels have historically acted as the accumulation levels.
Bullish Scenario: Better liquidity, renewed ETF inflows, and limited supply might lead BTC to $120,000-$170,000.
Bearish / Consolidation Scenario: Global economic factors continuing their negative impact and fading momentum might keep Bitcoin range-bound or push it into a deeper correction before the next upward phase.
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