The darkest hour gives birth to a new life: Is Bitcoin's dawn approaching in 2026?

Original author: Jordi Visser

Original translation by Luffy, Foresight News

On April 8th of this year, amidst the height of panic stemming from tariff disputes and Liberation Day, I published an article on Substack titled "After the Storm, Dawn Finally Appears." At that time, the S&P 500 had plummeted by 20%, economists were warning of an economic recession, and the market was gripped by panic. In the article, I pointed out that this sell-off, triggered by market factors, would become an excellent buying opportunity due to the development of artificial intelligence; six months later, people would find that compared to the rapid progress in the field of artificial intelligence, the initial panic was completely unnecessary.

And indeed, that's exactly what happened. The market gradually recovered, risky assets rebounded strongly, the hype surrounding artificial intelligence continued to rise, and people gradually adapted to the related market changes.

By November, Bitcoin had entered a consolidation phase, significantly underperforming the stock market, leaving cryptocurrency investors deeply disappointed. In my article, "Bitcoin's Silent IPO," I argued that Bitcoin's seemingly frustrating consolidation while other assets rose was not a sign of weakness, but rather a necessary distribution phase. Early Bitcoin whales finally had an opportunity to realize liquidity, systematically reducing their Bitcoin holdings with the help of strong institutional buying from exchange-traded funds and corporate treasuries. This is similar to the expiration of lock-up periods in a traditional IPO; while the process is unsettling and slow, it is crucial for the long-term health of the market.

However, this consolidation pattern was eventually broken. As the stock market entered a correction phase, especially with AI stocks, which were popular among retail investors, leading the decline, Bitcoin's "silent IPO"-style distribution of tokens triggered a deeper drop. This volatility turned Bitcoin's year-to-date gains into a slight negative value. The cognitive contradictions that previously puzzled the cryptocurrency industry have now evolved into genuine bearish sentiment and skepticism. The optimistic atmosphere of Liberation Day seems like a distant memory, and discussions about the impending end of Bitcoin's four-year cycle are intensifying. Social media is filled with claims that "Bitcoin has lost its upside potential," and even those who insisted that "this time is different" have conceded defeat and left the market.

This decline caused the cryptocurrency fear and greed index to drop to 15, matching the lows around Liberation Day, and the market seemed to have fallen into despair. This is why I wrote this article. Consistent with my previous views on Liberation Day, I maintain that the current trends of various assets are driven by the development of artificial intelligence. Moreover, I firmly believe that many years from now, all investors will realize that they missed a crucial opportunity, and Bitcoin is the best embodiment of the value of artificial intelligence.

It's worth noting that the Bitcoin white paper was published in 2008, and the Raina-Madhavan-Ng paper in 2009 was groundbreaking research that demonstrated that graphics processing units (GPUs) could improve the efficiency of deep learning by more than 70 times, thus ushering in a new era of GPU-driven machine learning. Both emerged around the same time, were groundbreaking innovations, and complemented each other; neither could exist without the other.

These groundbreaking innovations not only reduce the demand for office work but also, to some extent, decrease overall employment. Simultaneously, they exacerbate wealth inequality, forcing governments worldwide to maintain fiscal deficits. Meanwhile, rising financial asset prices become a form of universal income, a form of universal benefit. Today's universal income is not government-issued cash subsidies but rather universal benefits: the system's operating principles dictate that people's wealth will inevitably increase. For those without assets, government transfer payments constitute another form of universal income. This situation gives rise to what is commonly referred to as a K-shaped economy. Most people not only face employment anxiety and salary pressures from reduced corporate hiring but also bear the burden of inflation triggered by government universal income policies, leading to a continuous rise in the cost of living and growing discontent. In this context, Bitcoin benefits. Before artificial intelligence fully penetrates the capitalist system and public markets, Bitcoin has consistently moved in tandem with risk assets. The combination of stablecoins and AI agents accelerates capital flows and reduces market reliance on leverage. Asset tokenization allows illiquid assets such as real estate, private debt, private equity, and venture capital to trade freely around the clock, thereby reducing the leverage required to support these asset prices. As AI continues to develop, its deflationary effects will gradually become apparent. In 2026, advancements in areas such as AI-powered drug development, autonomous taxis, and AI agents will drive corporate profit growth; simultaneously, the widespread adoption of intelligent technologies will intensify market competition, further impacting the prices of various assets.

There's another interesting phenomenon in the current market: previously, people worried that Bitcoin wouldn't keep pace with the stock market's rise, but now its performance has finally returned to a reasonable trajectory. As the stock market corrected, especially with the decline of overvalued retail investor-driven AI concept stocks, Bitcoin also fell in tandem. The phenomenon of Bitcoin's divergence from the stock market during the "silent IPO" phase, which puzzled everyone, is no longer present. Bitcoin has returned to its characteristics as a risk asset, with its price movement closely correlated with market growth expectations and liquidity conditions. In my view, this will accumulate sufficient purchasing power and market momentum, laying the foundation for a new round of upward movement.

This means that, looking ahead to the market in 2026, I see a glimmer of hope once again. Just like the buying opportunity created by tariff fears in April, this pullback in Bitcoin as overall risk assets weaken is also setting the stage for the next significant surge.

The correlation between Bitcoin and the stock market actually signals a bull market.

There's a widespread misconception in the market that Bitcoin should be independent of traditional risky assets and follow its own price trend. A mainstream view holds that Bitcoin is comparable to digital gold, both hedging against the risks of the existing financial system and remaining uncorrelated with the stock market. Therefore, if Bitcoin falls along with the stock market, it means there's something wrong with it.

However, this view is wrong; Bitcoin is inherently a risky asset.

Admittedly, Bitcoin possesses store-of-value attributes and is decentralized. However, from a market sentiment and capital flow perspective, it is a high-risk asset with a high risk-reward ratio. Exchange-traded fund (ETF) investors often include Bitcoin in their portfolios alongside stocks, and when adjusting their portfolios to reduce risk, they simultaneously sell both Bitcoin and stocks. Retail investors also use the same funds to invest in both cryptocurrencies and stocks. Even those who invest in Bitcoin out of concern for currency devaluation tend to increase their purchases during periods of economic prosperity and ample cash flow.

Therefore, Bitcoin falls when the Nasdaq index declines, and it is also affected when AI-related stocks suffer. This is not a market flaw, but a normal phenomenon. Considering the current composition of Bitcoin holders, this trend is reasonable.

This phenomenon actually hints at a bull market: since Bitcoin is correlated with risk assets, its prospects are closely linked to the performance of those assets. In other words, to predict Bitcoin's future trend, one must first understand the future direction of the stock market.

Next, I'll explain why I'm confident about the performance of risky assets in 2026.

Market strategy for 2026: a synergistic approach combining fiscal, monetary, and artificial intelligence measures.

Market rallies are often accompanied by numerous concerns. Current market anxieties primarily focus on an artificial intelligence bubble, the risk of economic recession, and the sluggish cryptocurrency market. However, the market outlook for 2026 is very promising.

Fiscal support will continue to be a driving force. The Infrastructure Bill, the Chip and Science Act, and the Inflation Reduction Act are not just empty words; these multi-trillion-dollar spending plans will genuinely stimulate economic activity, while also creating fiscal deficits. To win the midterm elections, policies related to this "package of beneficial legislation" have already been implemented ahead of schedule. Currently, data centers are being built at an unprecedented pace, semiconductor factories are starting construction, and power infrastructure is being continuously upgraded.

The Federal Reserve has ample room to ease monetary policy. Current inflation is within a manageable range, although wages, housing prices, and oil prices are all under pressure this year. Even if tariff adjustments have some impact, given the weak job market, inflation is likely to remain stable. Artificial intelligence, however, will not only trigger deflationary effects but also impact the job market.

The field of artificial intelligence is poised for a breakthrough. The past year has witnessed astonishing progress in AI development, and the upcoming series of tangible applications will undoubtedly attract widespread attention from mainstream society.

• Artificial Intelligence Drug Development: The first batch of drugs developed using artificial intelligence are nearing clinical trials. Positive progress will have a disruptive impact on the healthcare industry and economic productivity. To date, pharmaceutical stocks have seen their best performance in 30 years in November. In the future, major pharmaceutical companies will undoubtedly compete to incorporate artificial intelligence technology into their R&D processes, and massive amounts of capital will flow into the field of AI-driven healthcare.
• In the field of autonomous driving: For years, the claim that "autonomous driving technology will be available within five years" has remained merely a slogan. Now, the field is finally reaching a turning point. Waymo, an autonomous driving company, is expanding its business, Tesla's Full Self-Driving technology continues to be optimized, and Chinese companies are also deploying autonomous taxis on a large scale. If autonomous taxis become widespread in major cities by 2026, the humanoid robot sector will also see a surge in speculative activity.
• Artificial Intelligence Agents and Productivity: AI agents capable of autonomously handling complex tasks will be widely used in various fields such as enterprise software, customer service, and creative industries. Their impact on improving productivity is immeasurable and will drive profit margin growth across industries. Artificial intelligence can help various enterprises improve efficiency, increase production capacity, and enhance profitability.

The manufacturing sector is also expanding. The construction of artificial intelligence infrastructure is driving the recovery of US manufacturing. After years of contraction, manufacturing is finally showing signs of recovery. I believe that driven by these positive factors, the Purchasing Managers' Index (PMI) will rebound in 2026. Historically, during periods of rising PMI, cryptocurrencies, especially altcoins, tend to perform exceptionally well.

Bears will cry foul, "The AI bubble is about to burst!" A bubble may indeed exist, but its duration and magnitude often exceed everyone's expectations. The dot-com bubble didn't burst when valuations first became unreasonable in 1997; it didn't peak until March 2000, three years later. From the end of 1994 to the end of 1999, the Nasdaq 100 index surged by a staggering 800%, while in the past five years, it has risen by less than 100%. Compared to the dot-com bubble, even if a bubble exists in the current AI field, it's only in its early to mid-stages. The mainstream hasn't fully embraced AI-related investments; even your friends and family won't be asking about AI stocks at Thanksgiving parties. This widespread discussion is often a characteristic of the later stages of a bubble, and the cryptocurrency market will likely follow suit.

Furthermore, bubble bursts often require a specific trigger, typically the Federal Reserve tightening monetary policy forcefully during a period of economic weakness. However, the Fed has already completed its tightening cycle and may even ease monetary policy in 2026 rather than restarting tightening. Therefore, there is currently no typical trigger for a bubble burst.

Positive catalysts for Bitcoin in 2026

If risk assets experience a strong rally in 2026, Bitcoin, as a high-beta risk asset, is highly likely to significantly outperform the market. In addition, several other specific positive factors for Bitcoin will further fuel its strong performance:

• A Clear Bill. Regulatory uncertainty has long constrained the development of the cryptocurrency market. The bill is expected to be passed by the end of 2025 or early 2026, at which time a clear regulatory framework will be established, clarifying regulatory responsibilities and eliminating legal ambiguities. Many large asset management companies and pension funds that previously adopted a wait-and-see attitude will also be permitted to invest in cryptocurrencies. At that time, the current inflow of funds into exchange-traded funds will appear insignificant compared to the massive influx expected.
• The scale of asset tokenization continues to expand. Large financial institutions such as JPMorgan Chase, BlackRock, and Franklin Templeton are all advancing the tokenization of government bonds, real estate, commodities, and stocks, and have built dedicated tokenization platforms. This not only confirms the value of cryptocurrency infrastructure but also proves that blockchain technology is not only applicable to digital assets like Bitcoin. As asset tokenization continues to advance, previously illiquid assets can be traded 24/7, and the demand for leverage decreases. Bitcoin's role as a neutral settlement asset will become increasingly prominent, making it a veritable network transmission protocol in the digital finance field.
• The development of stablecoins is accelerating. This is a severely underestimated positive factor. The application of stablecoins is rapidly expanding globally, particularly in developing countries. USDT and USDC have gradually become the main channels for dollar payments in many regions around the world. Whether it's Nigerians receiving USDC instead of Naira, Argentine companies holding dollar-denominated stablecoins instead of pesos, or cross-border payments being completed through stablecoins instead of relying on correspondent banks, it all signifies that cryptocurrency infrastructure has become an indispensable part of global trade.

Stablecoins and Bitcoin are not competitors, but rather complementary. Stablecoins serve as a medium of exchange in the digital economy, while Bitcoin functions as a store of value. As more business activities and capital flow into the digital economy, more and more funds will inevitably flow to Bitcoin. Stablecoins can be viewed as broad money in the digital economy, while asset tokenization acts as a bridge connecting traditional fiat currency assets with the digital economic system. This will create a powerful network effect: the widespread adoption of stablecoins will attract millions of new users to the cryptocurrency system, and these users, while holding stablecoins, will inevitably need a long-term store of value, making Bitcoin the natural first choice. The network effect brought about by the development of stablecoins will greatly promote the adoption of Bitcoin; its influence, though difficult to quantify, cannot be ignored.

History may repeat itself

Decades of market experience tell us that initial market lows often face a second test. This happened in April of this year, when the market bottomed out and rebounded, then retested the previous low before initiating a significant upward trend. This market pattern is quite normal and beneficial; it both solidifies market support levels and forces wavering investors to exit the market.

I expect Bitcoin may follow this trend. The market has likely already bottomed out, but a second test is possible in the coming weeks. At that time, the least committed investors may engage in a concentrated sell-off, triggering another decline, or even a brief panic sell-off that could push Bitcoin prices even lower.

If this pullback occurs as expected, it will present an excellent buying opportunity this year. During the pullback, savvy investors who missed the initial low will have a second chance to buy in. Furthermore, a pullback with shrinking trading volume and reduced panic will confirm the stability of the previous lows. However, I do not recommend investors deliberately wait for a pullback. Currently, both Bitcoin and the stock market are in a phase of widespread fear and low greed, making it a good time to seize the opportunity and position themselves.

Bitcoin's price has been under pressure this year. While the distribution of tokens during the "silent IPO" phase is not yet fully complete, significant progress has been made. Currently, Bitcoin's shareholding structure is more dispersed than ever before. Retail investors are generally bearish and choosing to wait and see, while exchange-traded fund investors are patiently accumulating tokens. Groups concerned about currency devaluation continue to steadily increase their holdings, and developing countries are gradually incorporating Bitcoin into their national financial infrastructure systems.

Meanwhile, the market environment in 2026 is extremely favorable. Fiscal policy continues to exert its strength, monetary policy provides favorable support, breakthroughs in artificial intelligence will drive market speculation and boost corporate profits, the manufacturing sector will gradually expand, the Clarity Act will eliminate regulatory concerns, asset tokenization will continue to grow, and the development of stablecoins will create a strong network effect.

Bitcoin is closely linked to risk assets, and with risk assets expected to perform strongly in 2026, Bitcoin will naturally follow suit.

The light of hope has never been extinguished.

I often think back to the market conditions around Liberation Day. The S&P 500 plummeted 20%, economists were warning of a recession, and investors were panic-selling assets. I predicted then that six months later people would find their initial panic unfounded, and history has proven me right.

I still hold the same view on Bitcoin today. This pullback has certainly been agonizing, and market sentiment has plummeted, with the cryptocurrency fear and greed index dropping to 15, matching the lows of Liberation Day. But pullbacks in a bull market always give the impression that the market is in dire straits, always create the illusion that "this time is different," and always lead people to mistakenly believe that the upward trend has completely ended.

But for investors who can overcome their panic, these pullbacks are always buying opportunities.

Throughout my trading career, I've weathered numerous crises, from the 1994 Mexican financial crisis and the 1998 Brazilian financial turmoil to the global financial crisis, the market turmoil triggered by the COVID-19 pandemic, and now the market volatility related to Liberation Day. These experiences have taught me that no matter how dire the current situation may seem, the reality is often not as bad as it appears. One unchanging truth is that, as long as one can overcome fear, these extraordinary times contain excellent investment opportunities.

Bitcoin is not in trouble, and crypto assets are not doomed. The current market volatility is a normal phenomenon for mature risk assets—they are still recovering from the market downturn of 2022 and are correcting in tandem with other risk assets during this period of uncertainty and portfolio adjustments. Compared to the market volatility in April, this correction is more concentrated, primarily affecting growth stocks and cryptocurrencies, rather than triggering a broad market panic. This is a healthier situation, indicating that the market is undergoing differentiated adjustments, and the subsequent rebound may be more rapid and targeted.

For astute investors, now is an opportune time to position themselves. However, investment requires rationality and restraint; avoid blindly leveraging and never invest beyond your capacity. Instead, base your decisions on a calm analysis of market fundamentals and make strategic investments with unwavering conviction.

With artificial intelligence driving excess returns on investment, market volatility is inevitable. Governments worldwide face numerous challenges in managing this disruptive technology, leading to moments of panic and skepticism in the market. Headlines about market crashes and impending bear markets may abound. However, investors should disregard these distractions and focus on market fundamentals. As one of the most influential innovations in human history, artificial intelligence will undoubtedly create a brighter future for us.

When everyone sees a glimmer of hope, it's too late to make moves. Currently, the cryptocurrency fear and greed index is only 15, with investors giving up and leaving the market, which is in a downturn. This presents a golden opportunity to invest in cryptocurrencies.

Six months from now, just like the market volatility following Liberation Day, the public opinion surrounding Bitcoin will undergo a dramatic transformation. Looking back at today's prices and market sentiment, people will surely wonder why they had their doubts in the first place.

The glimmer of hope is there; you just need to be willing to discover it.