Bitcoin's Macro Transition and the Fading Four-Year Cycle
For much of its history, Bitcoin price behavior was interpreted through a relatively simple four-year halving cycle. Supply shocks, speculative leverage, and reflexive narratives drove dramatic boom-and-bust patterns. As Bitcoin’s market capitalization expanded and institutional participation increased, this framework began to lose explanatory power.
Bitcoin’s growing integration into traditional financial infrastructure—including spot ETFs, institutional custody, and regulated trading venues—has gradually compressed volatility. Peak drawdowns in recent cycles have been smaller than those seen in earlier eras, while liquidity during stress events has improved. These developments suggest that Bitcoin is transitioning from a purely reflexive asset toward one that behaves more like a macro-sensitive risk asset.
As a result, Bitcoin increasingly trades in line with broader liquidity conditions, often showing higher correlation with technology-heavy equity indices during tightening or easing phases. This shift does not eliminate volatility, but it changes its drivers.
Bitcoin Price Structure in 2026: A Gold-Like Pattern
A useful analogy for Bitcoin’s current position is gold during periods of macro transition. Historically, when real interest rates begin to decline but uncertainty remains elevated, gold often experiences an initial drawdown or prolonged consolidation before resuming its longer-term uptrend.
Applying this pattern to Bitcoin suggests that short-term risks remain skewed to the downside or sideways. Galaxy’s analysis highlights a critical zone between 100,000 and 105,000. Without a sustained break and consolidation above this range, Bitcoin may remain trapped in a post-halving correction phase throughout much of 2026.
Such phases are typically characterized by choppy price action, fading speculative interest, and declining leverage rather than abrupt collapses. In previous cycles, these environments lasted many months, during which prices stabilized well before narratives recovered.
Bitcoin, Politics, and the 2026 U.S. Midterm Election
One of the most underappreciated macro variables shaping Bitcoin’s 2026 outlook is U.S. domestic politics. The U.S. midterm elections are scheduled for November 3, 2026, and financial markets rarely wait for election outcomes before adjusting exposure.
In 2025, the crypto industry benefited from a relatively favorable policy environment, with regulatory restructuring and clearer legislative signals supporting institutional confidence. However, as the midterms approach, the risk of political reversal or legislative gridlock increases.
Historically, institutional investors begin reducing exposure to policy-sensitive assets three to six months ahead of midterm elections. If this pattern repeats, mid-2026 could see systematic de-risking across speculative assets, including crypto. This process is often driven less by fundamentals than by risk management constraints, reinforcing Galaxy’s view that 2026 may be dull and volatile rather than strongly directional.
Bitcoin and Macro Liquidity: The AI Capital Expenditure Cycle
Beyond politics, global liquidity dynamics—particularly those tied to artificial intelligence—represent another key constraint. Major financial institutions have projected that global capital expenditure on AI infrastructure will peak in 2026, following several years of aggressive investment in data centers and supercomputing capacity.
Over the past two years, AI has absorbed a disproportionate share of global risk capital, diverting funds that might otherwise have flowed into crypto. As this infrastructure build-out matures, market focus is shifting from investment scale to monetization and returns.
A peak in capital expenditure is not inherently negative, but it often coincides with tighter liquidity. If revenue growth fails to justify prior spending, valuation compression and balance-sheet pressure can follow, leading capital to rotate back toward cash and government bonds.
Bitcoin, Balance Sheets, and Risk Asset Correlation
An important secondary effect of the AI investment boom is accounting-driven. Large hardware investments made in 2024 and 2025 will begin generating significant depreciation charges in 2026. Even if these are non-cash expenses, they can materially impact reported earnings and investor sentiment.
During periods of balance-sheet stress, correlations across risk assets tend to rise. Bitcoin, despite its distinct narrative, is unlikely to be immune. Until it is widely treated as a cash-flow-generating asset, its price will remain sensitive to broader liquidity contractions.
Bitcoin Price Expectations in Prediction Markets
These macro dynamics are increasingly reflected in prediction markets. On Polymarket, January Bitcoin price contracts have seen a sharp repricing following the recent volatility spike. The probability of Bitcoin touching 100,000 during January has dropped into the mid-teens percentage range, while higher targets such as 105,000 or 110,000 are priced in the low single digits.
Unlike sentiment surveys or analyst forecasts, prediction markets force participants to express views under strict settlement rules. In this case, outcomes depend on whether Bitcoin reaches specific price levels, even briefly, based on Binance BTC/USDT one-minute highs. This structure penalizes vague optimism and rewards realistic assessments of volatility and liquidity.
The current probability distribution suggests that traders expect range-bound behavior, with downside wicks seen as more plausible than upside extensions. This does not imply a structural bear market, but it does reinforce the view that early 2026 is more likely to be defined by consolidation than breakout.
What price will Bitcoin hit in January?
Bitcoin in 2026: From Narrative to Probability
Taken together, macro signals, Galaxy’s framework, and prediction market pricing form a coherent picture. Precious metals breaking to new highs reflect late-cycle risk hedging. Bitcoin stabilizing below 100,000 suggests constrained risk appetite. Prediction markets confirm that, when forced to quantify expectations, traders see limited near-term upside.
This convergence does not invalidate the long-term Bitcoin thesis. Instead, it refines the timeline. Bitcoin appears to be transitioning into a phase where patience, balance-sheet awareness, and macro context matter more than narrative momentum. In that sense, the current environment may feel uncomfortable, but it is structurally consistent with a maturing asset class.