The well-known cyclical pattern of boom-and-bust in the cryptocurrency market may have reached its conclusion as per the analysis from trading firm Wintermute.

In a detailed study, the firm indicated that the influence of institutional capital has overshadowed historical trends associated with Bitcoin’s halving, changing the dynamics of market performance. This implies that a general recovery in the market by 2026 is far from certain and will depend on particular market catalysts to direct significant liquidity.

A Shift in Market Structure

Wintermute asserts that the traditional four-year cycle is now obsolete. Their analysis is based on proprietary over-the-counter trading data from 2025, which showcases a significant deviation from the conventional flow of capital—where gains from Bitcoin typically cascaded into Ethereum, followed by other major cryptocurrencies and then to smaller altcoins. The year 2025 instead saw an extraordinary focus on few assets.

The launch of Bitcoin and Ethereum ETFs has sparked ongoing demand for these cryptocurrencies but has also resulted in what’s termed as ‘walled gardens,’ where fresh institutional liquidity remains concentrated only among a limited number of large-cap currencies, failing to diversify into the broader crypto markets.

This situation has affected the duration of altcoin price rallies, which averaged only 20 days in 2025 compared to 60 days the previous year. Furthermore, with retail investors shifting their attention to traditional equity markets, especially in sectors like artificial intelligence, the crypto market has lost a vital source of new capital.

Potential Avenues for Market Recovery

For the cryptocurrency market to break free from its current concentrated state by 2026, Wintermute underlined three essential triggers:

1. Wider Inclusion of Assets: A broader mandate in ETFs and digital asset trusts (DATs) to encompass additional cryptocurrencies.
2. Strong Price Movement: Significant rallies in Bitcoin or Ethereum prices could trigger a wealth effect that benefits other digital assets, reinstating the capital flow last observed in 2024. Notably, some analysts assign a 55-65% probability for Bitcoin’s potential prosperity, provided it maintains critical price thresholds.
3. Return of Retail Interest: The least likely driver, involving the rekindling of retail investor enthusiasm for cryptocurrencies, which could spur fresh capital influx and enhance stablecoin issuance.

Recent data from Santiment points to underlying network expansion even without immediate price spikes, indicating a potential for future growth. Ethereum notably recorded an all-time high of new wallet creation on January 11, 2026, with approximately 393,600 new addresses added in a single day, spurred by reduced fees and stablecoin operations.

The overarching trajectory for 2026, as outlined by Wintermute and echoed by industry commentators, will hinge on whether these catalysts can successfully broaden liquidity and reshape market dynamics, shifting away from a reliance on predictable historical cycles.