Analysts at Bernstein expect the current downturn in cryptocurrency markets to reverse in the first half of 2026. This was reported by The Block.
Experts estimate that the current bear phase will end when Bitcoin reaches the previous cycle highs around $60,000.
On February 2, the price of the leading cryptocurrency fell below $75,000. At the time of writing, it has recovered to around $79,000, trading approximately 38% below its all-time high of $126,080 recorded in October.
Bitcoin's price decline has continued for four consecutive months. According to CoinGlass, January marked the worst start to the year for the cryptocurrency in the past five years.
Bernstein attributed the price drop to a lag behind gold's performance. The market capitalization of the digital asset has fallen to 4% of that of the precious metal, nearing a two-year low.
The price of gold has surged due to accumulation by central banks, including those in China and India. By the end of 2025, gold's share in global reserves is expected to reach about 29%.
Bernstein analysts largely linked Bitcoin's correction to growth during the "institutional cycle." Over the past two years, assets under management have increased to approximately $165 billion, a period also characterized by the establishment of numerous corporate BTC treasuries.
Experts believe that sustained participation from financial institutions in cryptocurrency will continue, as recent outflows from exchange-traded funds represent a small fraction of total assets. Miners are not showing signs of capitulation.
Analysts also consider U.S. policy dynamics as potential drivers for Bitcoin. They highlighted the creation of a strategic crypto reserve from confiscated assets and the possible appointment of Kevin Warsh as head of the Federal Reserve.
According to Bernstein analysts, all these factors indicate that the current weakness in the digital currency market is a late-stage correction rather than the beginning of a prolonged crypto winter. The firm expects short-term volatility to persist, but the 2026 turnaround will lay the groundwork for "the most significant cycle" for Bitcoin.
The Decline Could Be Much Deeper
Bloomberg Intelligence's senior commodity strategist Mike McGlone reiterated his forecast of a potential drop for the leading cryptocurrency to $10,000 this year.
He identified $50,000 as the first target level on this trajectory. In his updated baseline scenario for the coming months, the analyst referred to a potential increase in volatility across all major assets.
"A trader's paradise, 2026 will resemble 2008 and 2000-2001," McGlone emphasized.
Kraken's global economist Thomas Perfumo commented to Cointelegraph that Warsh's potential appointment as Fed chair sends a "mixed" signal for Bitcoin and other cryptocurrencies. The prospective central bank head may support lowering the key rate but is skeptical about expanding liquidity, to which digital assets are more sensitive, the expert noted.
Similar concerns were expressed by Coin Bureau co-founder Nick Pakrin.
"Markets are analyzing Warsh's views on future Fed policy, particularly regarding the central bank's balance sheet, which he claims is 'trillions larger' than necessary," he pointed out.
Pakrin emphasized that any measures to reduce the Fed's balance sheet would primarily negatively impact risk assets and precious metals.
Analysts at QCP Capital also noted that markets fell in sync following Warsh's recent statements — the risk-off sentiment extended to safe-haven assets. Bitcoin stabilized above the technically significant level of $74,500; however, a sustained close below $74,000 would increase the risk of a drop into the 2024 price range, experts believe.
They consider institutional flows and Warsh's stance as key signals for the crypto market.
Recall that Cantor Fitzgerald suggested that digital assets are entering an early stage of a prolonged decline. A CryptoQuant author under the nickname Crazzyblockk speculated about the market transitioning into an "extremely bearish" phase.