Bitcoin gains on liquidity, but the potential impact of the ‘halving cycle’ could temper its 2026 rally, according to Schwab.

Schwab: Liquidity Supports Bitcoin, but Halving Cycle and Adoption Risks Could Limit 2026 Gains

Bitcoin (BTC $91,452.15) enters 2026 under the influence of both macro trends and market-specific dynamics, 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 liquidity, large wallet concentration, and financial contagions.

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

Monetary policy also adds tailwinds. With quantitative tightening concluded and balance sheets expanding, rates and the dollar are expected to decline, boosting liquidity.

However, headwinds remain. Adoption could slow in early 2026, though regulatory clarity, such as the Clarity Act, may accelerate institutional participation. The halving cycle also poses a potential drag; historically, the third year has been weak. While Bitcoin has averaged 70% gains from annual lows since 2017, 2026 returns are expected to be more modest.

Ferraioli notes a shift in correlations: Bitcoin remains tied to megacap AI stocks, but its connection to broader equities is weakening, suggesting it may move more independently from traditional markets in the year ahead.