Wintermute: Whether cryptocurrencies can recover by 2026 depends on three key outcomes

The pendulum of the crypto market appears to be swinging uncertainly in 2025. Although Bitcoin reached a cycle high of $126,000, the anticipated “altcoin season” did not arrive as expected, and market breadth significantly narrowed. Noted market maker Wintermute pointed out in its latest analysis that the traditional four-year cycle logic is failing, and the market recovery in 2026 is not guaranteed but depends on the realization of three key outcomes.

Changes in Market Structure: The Failure of Traditional Cycles and Liquidity Challenges

The market performance in 2025 has left many investors expecting a “halving bull run” confused. Bitcoin’s rise has not effectively spilled over into the broader altcoin market.

Wintermute observed that the long-term “funds rotation” pattern—where gains in Bitcoin and Ethereum drive a narrative-driven market rally—has failed in 2025. Liquidity is highly concentrated in a few large assets, mainly driven by spot ETFs and institutional inflows. As a result, market breadth has narrowed, and asset performance divergence has intensified.

Wintermute’s report shows that the average rally cycle for altcoins has shortened from about 60 days last year to around 20 days, with only a few tokens able to outperform the market.

Three Major Recovery Paths: Wintermute’s 2026 Blueprint

Faced with structural shifts, Wintermute has outlined three clear paths for potential recovery in 2026. If any one of these is achieved, it could restart the market upward trend.

Path One: Substantial Expansion of Institutional Allocation

Currently, institutional funds, through tools like ETFs, are mainly allocated to Bitcoin. The key to recovery lies in whether ETFs and corporate digital asset treasuries can expand their allocations beyond Bitcoin and Ethereum to other asset classes. This means assets like Solana, some key Layer 2 tokens, or DeFi protocols with strong cash flows need to enter mainstream institutional focus. This process will bring in new, large-scale incremental capital.

Path Two: Mainstream Assets Rebound Strongly and Create Wealth Effects

If core assets like Bitcoin and Ethereum can achieve significant upward movement again on top of the current base, the resulting wealth effect could spill over and drive the entire market. This would require powerful catalysts similar to the spot Bitcoin ETF approval in early 2024. Standard Chartered believes Bitcoin needs to break above its $126,000 all-time high to confirm a new upward trend.

Path Three: Retail Attention and Capital Make a Strong Return

Currently, retail investors’ attention is diverted by high-return sectors such as AI, stocks, and commodities. The return of retail capital requires compelling new narratives and a more favorable macro environment. Clear Street Managing Director Own Lau pointed out that the Federal Reserve’s rate cuts will be a key catalyst, creating a cheaper capital environment and higher risk appetite.

Institutional Consensus and Market Forecasts: Price Anchors for 2026

Although the paths are clear, where is the market headed? Major institutions have provided their forecasts, offering reference points under different scenarios.

Bitcoin: Target Range Under Institutional Pricing

As the market structure shifts toward institutional dominance, the traditional “halving cycle” pricing model is being revised. Institutions like Standard Chartered have significantly lowered short-term targets but maintain a bullish long-term outlook.

Standard Chartered lowered its 2026 Bitcoin target price from $300,000 to $150,000, believing the current market is driven by spot ETF inflows rather than the traditional halving cycle. Bernstein also set the same 2026 target at $150,000. Citibank provided more detailed scenario forecasts: $143,000 in baseline conditions, up to $189,000 in a bull market.

Ethereum: Revaluation Under Utility Narrative

Ethereum’s performance in 2026 will be more closely tied to its ecosystem’s actual utility and cash flows. Tom Lee predicts that driven by Wall Street asset tokenization, Ethereum could reach $7,000–$9,000 in early 2026. Longer-term, as its role as a global settlement layer solidifies, some analysts believe its value could move toward $12,000 or higher.

Market Outlook and Strategic Insights

As of January 14, 2026, according to Gate platform data, Bitcoin (BTC) is at $95,459.4, Ethereum (ETH) at $3,336.54, and Gate’s native token GT at $10.79, with all three recording gains of over 4.5% in the past 24 hours. The current positive performance partly reflects market expectations of macro liquidity improvement. Wintermute previously noted that global monetary easing, the end of US quantitative tightening (QT), and active fiscal stimulus form a positive macro backdrop.

Investors should remain aware of the structural shifts. This means a broad rally may be less likely to recur, and capital will flow more efficiently into leading projects with clear moats, real utility, and cash flows. For ordinary investors, scenario-based planning and strict risk management in 2026 are more important than relying on a single narrative. Consider adopting a phased allocation strategy, focusing on core assets and proven ecosystems.

The crypto market stands at the threshold of a new era. The gates of institutional treasuries are slightly opening but not fully unlocked; retail investors’ attention shifts between AI and stocks, awaiting signals of return. Citibank analysts concluded their report by stating, “The path to recovery may be gradual and uneven.” The market moves through fog, with each trade contributing to a new equilibrium pricing.