2026 Outlook (Part 2): Bitcoin, The Shift in Pricing Power from Digital Gold to Neutral Value Reserve

2026 marks a historic inflection point for the Bitcoin market. On a macro-narrative level, intense global geopolitical conflicts are accelerating the breakdown of the existing financial system. The petrodollar hegemony established by the United States through the Bretton Woods system is facing a fierce challenge from the renminbi system built by China leveraging its manufacturing and high-tech industry advantages. This multipolar transition in the financial order presents a historic opportunity for blockchain technology. Superficially, the market exhibits significant divergence regarding price trajectory, the actual contribution of DATs, and the pace of volatility convergence. However, beneath these debates over short-term paths lies a profound and unified consensus on Bitcoin's long-term positioning: Bitcoin's pricing mechanism has completely decoupled from the halving cycle narrative, and its pricing power is irreversibly shifting from crypto-native capital to being dominated by the asset allocation logic of traditional capital markets. Its core value anchor has evolved from the grand narrative of "digital gold" to a core strategic allocation asset on the balance sheets of nations and institutions, making the long-term convergence of its volatility towards that of commodities an inevitable trend.

Looking ahead to 2026, the market is expected to exhibit a wide-range consolidation pattern in the first half, driven by the interplay between ETF/DAT inflows and macro volatility. As macro policies like the Federal Reserve's interest rate cuts materialize in the second half and national and institutional holdings continue to expand, the consensus on the transfer of pricing power will become more pronounced, leading to a narrowing of price fluctuations. Geopolitical hedging needs and the demand for multipolar financial infrastructure will accelerate the strategic allocation of Bitcoin by nations and institutions, and the narrative of a neutral store of value will completely dominate the market mainstream.

1. Introduction: A New Paradigm Emerging from Market Divergence

For a long time, the Bitcoin market followed a pattern of extreme volatility driven by retail sentiment, leverage cycles, and the quadrennial halving supply-side narrative. However, since the approval of spot ETFs in January 2024 and the market's structural adjustment in 2025, a new paradigm has been quietly establishing itself.

Over 30 top-tier Wall Street and crypto-native institutions, in their annual outlooks released between December 2025 and January 2026, unanimously noted that the cryptocurrency industry is transitioning from the "restlessness of adolescence" to the "steadiness of adulthood," entering a so-called "industrialization phase." Grayscale, in its December 15, 2025 report, termed this the "Dawn of the Institutional Era," with the core of this transformation being the transfer of Bitcoin's pricing power: the beginning of Bitcoin formally filling the "neutral store of value" vacuum within a multipolar geopolitical landscape.

On a deeper level, the rapid changes in the current geopolitical landscape are accelerating this process. Nations like Russia and Iran are effectively circumventing U.S. economic sanctions through Bitcoin and stablecoin settlements. Third-world countries seek to leverage blockchain technology to build independent financial infrastructure separate from the traditional Western-led system. Meanwhile, U.S. institutional investors are allocating to Bitcoin to hedge against dollar inflation risk. This global demand for the reconstruction of a multipolar financial order provides Bitcoin with unprecedented strategic allocation value.

On-chain data confirms the profundity of this shift: As of January 13, 2026, Bitcoin's circulating supply reached 19,975,087, with 95.12% already mined. Its annualized inflation rate dropped to 0.823%, historically falling below gold's 1.5%-2% for the first time. Simultaneously, institutional holdings reached unprecedented levels—U.S. spot ETFs saw cumulative net inflows of $56.4 billion, with Assets Under Management (AUM) reaching $116.86 billion, accounting for 6.48% of Bitcoin's total market cap. Globally, approximately 160 publicly traded companies held 1.105 million BTC (5.53% of total supply), with Strategy alone holding 687,400 BTC. These "non-circulating inventories" collectively lock up about 1.7 million BTC, equivalent to 8.5% of the circulating supply, structurally reshaping the market's supply-demand dynamics.

This chapter will focus on the surface-level divergences emerging in the current transitional period, looking beyond them to argue for the underlying, unified long-term logic driven by its role as a neutral store of value.

2. The Three Dimensions of Market Divergence: Data-Driven Path Contention

Despite converging on the long-term direction, the market holds significant disagreements on how to reach that destination in 2026, primarily manifesting in the following three dimensions:

2.1 Price Trajectory Debate: Unilateral Breakout vs. Wide-Range Consolidation

The optimistic view posits that Bitcoin will set a new all-time high in 2026, targeting a range of $120,000 to $225,000. This expectation is primarily supported by the compounding effect of a triple-engine of capital inflows.

First is the sustained net inflow into ETFs. Bitwise's 2026 Outlook boldly asserts: "ETFs will buy more than 100% of the new supply of Bitcoin, Ethereum, and Solana," meaning ETF buying would completely absorb the post-halving supply contraction and compete for existing market supply. As of January 2026, U.S. spot ETFs had accumulated net inflows of 600,590 BTC. Following Bitwise's logic, with the annual new supply post-2026 halving being approximately 164,250 BTC, ETFs only need to maintain their current monthly inflow rate of 20,000-30,000 BTC to achieve over-coverage.

Second is the continuous buying by DAT companies. Globally, 160 public companies have added Bitcoin to their balance sheets, with Strategy continuously expanding its holdings to 687,400 BTC in 2025. Companies like iPower have even conducted dedicated financing rounds for Bitcoin purchases. The ongoing inclusion of relevant companies in MSCI indices further validates the mainstreaming of this strategy.

Third is the macro tailwind from Fed rate cut expectations. The market widely anticipates the Fed will restart its rate-cutting cycle in the second half of 2026, improving global liquidity and creating a favorable environment for risk assets. These three sources of capital support form a dual foundation of institutional allocation and macro liquidity, sufficient to drive prices past the 2025 all-time high.

The cautious view holds a starkly different position. Galaxy Digital, in its December 18, 2025 report, bluntly stated that 2026 is "too chaotic to predict" but, based on options market pricing, gave an equal probability year-end range of $70,000-$150,000. This judgment is based on three major headwinds.

First is Bitcoin's high correlation with traditional risk assets. Social media analysis indicates Bitcoin's correlation with the S&P 500 has exceeded 0.7, making it more susceptible to spillover effects from U.S. stock market macro volatility. In 2026, a year of global macro policy transition, uncertainties surrounding the Fed's rate cut pace, potential Bank of Japan rate hikes, and recurring European inflation will directly impact Bitcoin's price.

Second is the technical resistance revealed by on-chain data. UTXO Age Band analysis shows a heavy concentration of cost basis between $92,100 and $117,400. These coins, purchased near the 2025 peak, constitute a formidable supply wall overhead. The current price has touched the lower edge of this cost cluster; any upward movement requires time and capital to absorb selling pressure from these underwater holders. The short-term holder cost basis around $95,000 will be a key psychological and technical resistance level.

Third is the uncertainty of ETF fund flows. Despite impressive cumulative inflows, ETFs can experience periods of net outflows. Between October and December 2025, Bitcoin's price corrected 40% from its peak, yet the realized cap stabilized at a historical high of $1.125 trillion. This indicates institutional holders did not panic sell, but also suggests a slowdown in new capital inflows. If a deteriorating macro environment leads to sustained ETF net outflows, it would directly undermine the narrative of institutional demand.

The core judgment of the cautious camp is that the outcome of the tug-of-war between the staying power of institutional capital and macro uncertainty will determine whether 2026 sees a unilateral breakout or wide-range consolidation.

2.2 DAT Narrative Debate: Sustained Engine vs. Fragile Flywheel

The debate surrounding the DAT model also presents diametrically opposed views.

Proponents view DATs as a sustained capital engine, seeing them as another source of institutionalized demand following ETFs. As of January 2026, roughly 160 global public companies hold Bitcoin, with the top 100 holding 1.105 million BTC, accounting for 5.53% of total supply. This scale already surpasses the sovereign reserve considerations of many single nations, becoming a structural demand that cannot be ignored.

Actions by companies like iPower conducting dedicated financing for Bitcoin purchases and Strategy continuously expanding holdings indicate DAT is not merely passive "buy and hold" allocation but an active asset management strategy. The ongoing inclusion of companies like Strategy in MSCI indices further validates market acceptance of this model. Proponents believe that as more companies emulate this, DATs will create price-independent fundamental demand, providing long-term support for Bitcoin.

Skeptics characterize DATs as a price-dependent passive model, emphasizing its inherent fragility. Grayscale, in its December 15, 2025 report, directly dismissed DATs as a "red herring," arguing their media buzz outweighs their actual pricing impact and they will not be a primary market factor in 2026. Galaxy Digital went further, warning on December 4, 2025, predicting that at least 5 DAT companies will fail or be acquired in 2026 due to operational issues.

The core argument of skeptics lies in the DAT model's "buy Bitcoin → raise capital" flywheel being highly dependent on rising Bitcoin prices. Standard Chartered noted in a report that DAT company stock prices exhibit high-leverage correlation with Bitcoin's price. A deep Bitcoin correction could trigger a negative spiral: "stock price decline → financing difficulties → forced Bitcoin sales → further Bitcoin price decline." Social media analysis also contains explicit predictions: "DAT structure relies on leverage, expected to be forced to liquidate reserves in a downturn, stock price to zero within 12 months."

On-chain data shows that smaller DAT companies often trade below their Bitcoin Net Asset Value (mNAV < 1), indicating market skepticism about their business model's sustainability. If Bitcoin's price fails to break out as expected in 2026, these companies could face liquidity crises.

The focal point of divergence is: Is the DAT model creating price-independent fundamental demand, or is it merely a passive follower that amplifies market volatility?

2.3 Volatility Convergence Debate: 2026 Realization vs. Delay to 2027

Regarding the timeline for Bitcoin's volatility to converge with traditional assets, the market is similarly divided.

The optimistic expectation is that convergence will be achieved within 2026. Bitwise boldly asserts in its forecast: "Bitcoin's volatility will be lower than Nvidia's for the first time." This prediction is symbolic—Nvidia, as a representative tech stock, has volatility significantly higher than traditional commodities. If Bitcoin's volatility falls below it, it signifies a fundamental change in Bitcoin's asset attributes.

The basis for this expectation is the continuous increase in institutional holding share. ETFs and DATs, as non-circulating inventories, collectively lock up about 1.7 million BTC, accounting for 8.5% of circulating supply, significantly reducing the speculative float. The buy-and-hold allocation behavior of institutional investors, in stark contrast to retail's high-frequency trading, can effectively smooth out short-term speculative volatility.

Another Bitwise prediction adds: "Bitcoin's correlation with stocks will decline," meaning Bitcoin will gradually shed its "risk asset beta" positioning and evolve towards an independent asset class, thereby reducing the transmission effect of macro volatility.

The cautious view believes convergence will be delayed until 2027. VanEck, in its Long-Term Capital Market Assumptions, states that Bitcoin's annualized volatility is expected to remain in the 40%-70% range, comparable to frontier market equities and far above gold's 15%-20%. This judgment is based on three reasons.

First, reshaping asset attributes is not an overnight process. Despite unprecedented institutional holdings, retail and leveraged traders still constitute a significant proportion. A complete transformation of market structure requires more time.

Second, early 2026 market data shows implied volatility has moderately rebounded from historical lows, indicating the market's pricing of short-term volatility has not disappeared. Galaxy Digital notes Bitcoin is shifting towards a "macro asset skew," with put option prices higher than call options, reflecting market concern over downside risks.

Third, macro data shocks remain significant. In a year of global macro policy transition, changes in liquidity expectations can still cause periodic shocks to Bitcoin. Some KOLs state: "Short-term bullish for 1-2 months, but pessimistic on 2026 macro, liquidity insufficient to support momentum." If geopolitical conflicts escalate or the Fed's rate cuts fall short of expectations, volatility could periodically rebound.

The core of the divergence is: Can the institutionalization process complete the leap from quantitative to qualitative change within 2026, leading to substantive volatility convergence, or will it need to extend into 2027?

3. The Unified Consensus Beneath the Divergence: The Irreversible Trend of Institutionalization

Despite differing on the paths above, market participants have formed a strong consensus on the following three fundamental issues, which constitute the cornerstone of Bitcoin's new value narrative.

3.1 Consensus One: Pricing Power Transfer Complete, Halving Cycle Narrative Marginalized

This is the most fundamental consensus above all divergences. Multiple institutions including 21Shares, Bitwise, Grayscale, and Fidelity explicitly declared in their December 2025 reports: Bitcoin's "four-year halving cycle" narrative has completely broken down.

21Shares stated bluntly "the four-year cycle has broken," Bitwise predicted "Bitcoin will break the four-year cycle and make new highs," Fidelity discussed in a livestream that "the traditional four-year cycle for crypto may be over," and Grayscale titled its report "The End of the So-Called 'Four-Year Cycle'."

Data supports this claim. Following the fourth halving in April 2024, Bitcoin's price appreciation was far weaker than in the previous three cycles (2012, 2016, 2020), indicating the halving's price-boosting effect has drastically diminished. More crucially, the driving force has completely shifted from "supply-side (halving)" to "demand-side (store of value)."

Fidelity stated directly that the market has entered a "new paradigm." ETF daily trading volume constitutes an increasingly significant portion of Bitcoin's total trading volume, becoming a new liquidity center and price discovery venue. As of January 2026, ETF cumulative net inflows of 600,590 BTC equal 100% of the cumulative new supply (approx. 600k BTC) from the April 2024 halving to January 2026, completely absorbing the supply contraction.

The proliferation of DAT strategies and sovereign reserve discussions further systematically locks up supply. Asset management giants like BlackRock and Fidelity conduct quarterly asset allocation for clients, their capital flows becoming a more persistent pricing factor than halvings. Institutional and traditional finance buyers are countering cycle-based sellers, with Bitcoin's scarcity relative to gold and real estate being undervalued.

The dominant pricing power has shifted from crypto-native capital focused on "block reward halvings" to traditional asset managers focused on "Sharpe ratios, asset correlations, and allocation percentages." This is an irreversible transfer of power.

3.2 Consensus Two: Value Anchor Reshaped, Becoming a Core Allocation on Institutional Balance Sheets

Regardless of short-term price views, the market agrees Bitcoin's long-term value foundation has migrated. It no longer relies solely on the relatively abstract "digital gold" narrative but is concretely anchored to three solid pillars, and gains additional strategic value in the context of the current geopolitical order restructuring.

1. Moderate and Analyzable Correlation with Traditional Assets.

Although Bitcoin's current correlation with the S&P 500 exceeds 0.7, viewed by some as a risk, the institutional perspective sees this correlation as modelable and predictable. Bitwise predicts "Bitcoin's correlation with stocks will decline," meaning as institutional allocation share increases, Bitcoin will gradually shed its pure risk asset beta status and evolve towards an independent asset class. This moderate correlation allows it to be incorporated into traditional portfolio mean-variance optimization models, rather than being a completely isolated speculative instrument.

2. Absolute and Verifiable Scarcity.

As of January 13, 2026, 95.12% of Bitcoin has been mined, with its annualized inflation rate dropping to 0.823%, historically falling below gold's 1.5%-2% for the first time. The hard cap of 21 million coins is guaranteed by consensus protocol, unalterable by any central authority. This "algorithmic scarcity" differs from gold's "physical scarcity" and is more suited for value storage in the digital age.

3. Increasingly Robust Compliant Allocation Channels.

The U.S. GENIUS Act was signed into law by President Trump on July 18, 2025, establishing a federal regulatory framework for stablecoins, requiring 100% reserves and monthly disclosures, with its regulatory clarity benefiting the entire industry. The CLARITY Act passed the House on July 17, 2025, aiming to divide CFTC and SEC regulatory authority and provide a safe harbor for DeFi, significantly reducing legal uncertainty for institutional participation. The EU's MiCA regulation, effective December 30, 2024, classifies Bitcoin as "other crypto-assets," requiring service providers to be licensed and comply with disclosure and anti-manipulation rules, with