Charles Schwab says Bitcoin’s 2026 performance will be pulled by three long-term forces and seven short-term factors, with better liquidity conditions supporting risk assets while the halving-cycle narrative may still limit the scope of any rally.
Jim Ferraioli, director of crypto asset research and strategy at the Schwab Center for Financial Research, said the long-run pillars for Bitcoin are global M2 money supply, Bitcoin’s disinflationary supply growth, and adoption. Short-term trading conditions are less straightforward. He said investors should watch market risk appetite, the path of interest rates, U.S. dollar strength, seasonal patterns, whether central-bank liquidity becomes excessive, whale wallet positioning, and the possibility of financial contagion.
Early 2026 signals look constructive, but institutional demand may cool for now
At the start of 2026, several near-term indicators appear to lean bullish. Ferraioli said credit spreads remain tight, and the sharp correction at the end of 2025 flushed out a large amount of unstable speculative derivatives exposure, leaving market positioning in cleaner shape. If equities stay in a risk-on mode, that would theoretically favor crypto as a high-risk asset class.
He also expects monetary policy to shift from a headwind to a tailwind. With quantitative tightening, or QT, ending and balance sheets expanding again, stronger liquidity could support Bitcoin prices. Softer rates and a weaker dollar are also seen as helpful for risk assets.
Still, the late-2025 shock has not fully faded. Ferraioli warned that institutional adoption could slow in the first half of 2026. That picture could change if the U.S. Congress passes the Digital Asset Market Clarity Act, which he said would likely accelerate institutional positioning.
The post-halving third year remains a psychological overhang
Ferraioli said the halving cycle is another variable the market cannot ignore. Based on historical patterns, Bitcoin has often struggled in the third year after a halving event. Even if fundamentals improve, that belief can affect behavior on its own and become a source of pressure.
Data since 2017 show that Bitcoin has posted an average gain of about 70% each year from its low. Ferraioli expects Bitcoin to still deliver a positive return in 2026, though the advance may come in well below that historical average.
He also pointed to a structural shift in correlations. Bitcoin remains closely linked with large AI-related technology stocks, while its correlation with broader equity indexes has been declining.