When bitcoin peaked at $126,000 on Oct. 6, 2025, market sentiment overwhelmingly favored a year-end rally toward new all-time highs. Few anticipated a slide back below the six-figure mark, let alone a year-end finish in the red. This optimism was anchored in the historical 4-year cycle, which suggested that 2025 — a post-halving year — was destined for significant gains.

The narrative shifted abruptly on Oct. 10, when a massive liquidation cascade triggered a steep downtrend, eventually dragging bitcoin down to near $80,000. Despite subsequent signs of resilience, the asset lacked the momentum required to reclaim the psychological $100,000 barrier before the year closed. While the first week of Jan. 2026 has offered glimpses of a recovery, technical indicators suggest a return to previous highs is not imminent.

Ultimately, 2025 served as a wake-up call. The 4-year cycle appears to have lost its predictive power, forcing investors to look beyond historical halving patterns toward new metrics to gauge bitcoin’s long-term trajectory.

Read more: Is the Bitcoin Four-Year Cycle Broken After 2025’s Unexpected Finish?

The consensus among analysts is that bitcoin is undergoing a fundamental regime shift. The 2025 performance is not seen as a failure of the asset, but as evidence that institutional “smart money” has fundamentally altered the market’s DNA. Experts argue that institutional capital — often hedged, long-term and governed by strict mandates — has stabilized price action. This results in “slower appreciation” and a more resilient, if less explosive, price floor.

There is also a growing belief that bitcoin has moved beyond its status as a speculative niche asset. Factors such as U.S. Federal Reserve interest rate policies and institutional rebalancing now dictate its price more than retail speculation.

Han Tan, chief market analyst at Bybit Learn, argues that new demand sources have changed the nature of the cycle. “While retail participants will still play a major role in crypto, their influence has been tempered by institutional players,” Tan explained. This viewpoint is echoed by Richard Usher, director of trading at Openpayd, who noted that well-resourced participants have matured the market structure. “Over time, that shift should support more durable price action,” Usher said.

Evidence of this shift appeared in early January, with significant inflows into ETFs on Jan. 2 and Jan. 5. These inflows coincided with bitcoin surging past $94,000 for the first time since Dec. 9. Unlike the fleeting rallies of late 2025, bitcoin appears to be holding above $90,000.

However, some observers attribute the early 2026 rally more to a “short squeeze” — where traders betting on a price drop are forced to buy back positions — than to new capital. Nima Beni, founder of Bitlease, noted that while indeed the squeeze provided liquidity, “smart money” provided the floor.

“The real story is the capital that realized waiting for a ‘better entry’ was a mistake,” Beni said. “The window to buy cheap has essentially slammed shut.”

Iliya Kalchev, a Nexo Dispatch analyst, concurred, stating that ETF inflows provide direct spot-market support. He added that inflows into spot ethereum and select altcoin ETFs suggest a “broader, albeit cautious, risk re-engagement rather than a narrow squeeze-driven move.”

Ben Caselin, CMO at the crypto exchange VALR, concluded that the rally is a healthy blend of technical forced buying and fresh annual capital deployments. “This blend underscores a healthier rally foundation than pure liquidation-driven spikes,” Caselin said.

• Why did bitcoin drop after peaking at $126K in Oct. 2025? A massive liquidation cascade on Oct. 10 drove prices down near $80K.
• Has the 4‑year halving cycle lost its predictive power? Analysts say institutional capital has reshaped bitcoin’s trajectory beyond historical cycles.
• What factors now drive bitcoin’s price globally? U.S. Fed policy, ETF inflows, and institutional rebalancing outweigh retail speculation.
• Is the January 2026 rally sustainable? Experts view it as a mix of short squeeze liquidity and fresh institutional capital support.

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