Schwab: Bitcoin Supported by Liquidity but Halving Cycle Clouds 2026 Outlook

Bitcoin (BTC $91,452.15) enters 2026 influenced by a mix of macro trends and market-specific factors, according to Jim Ferraioli, director of crypto research and strategy at the Schwab Center for Financial Research.

Ferraioli highlights 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 liquidity, the concentration of large wallets, and financial contagions.

Several short-term factors currently favor Bitcoin. Credit spreads remain tight, and speculative derivative positions that contributed to late-2025 volatility have largely unwound. “A risk-on environment in equities should be supportive of crypto—the ultimate risk asset,” Ferraioli said.

Monetary policy also adds support. With quantitative tightening over and balance sheets expanding again, he expects rates and the dollar to trend lower, bolstering liquidity.

However, challenges remain. Adoption could slow in early 2026 after last year’s volatility, though Ferraioli sees upside if regulatory clarity improves. “Passage of the Clarity Act could accelerate institutional adoption,” he noted.

The halving cycle may also weigh on prices. Historically, the third year of the cycle has been weak, and many investors follow this pattern. While Bitcoin has typically gained around 70% from its annual low since 2017, Ferraioli expects 2026 returns to fall short of that historical average.

He also flagged a shift in correlations. Bitcoin remains linked to megacap AI stocks, but its connection to broader equities is weakening, suggesting it may become less influenced by traditional markets and macro factors.