Bitcoin in 2026: Will It Break the Four-Year Cycle or Face a 60% Drawdown?

Bitcoin's 2026 price trajectory sits at a crossroads, torn between competing macroeconomic models and shifting market dynamics. On one side, the traditional four-year halving cycle suggests a bearish reset. On the other, broader economic frameworks like the Benner Cycle and institutional-driven forces hint at a potential all-time high. Meanwhile, macroeconomic risks-including U.S. midterms and Fed policy-loom as catalysts for a 60% drawdown. This analysis unpacks the tension between these narratives and what it means for investors.

The Four-Year Cycle: A Bearish Reset or a Broken Model?

The four-year halving cycle has long been a cornerstone of Bitcoin analysis. Historically, it follows a pattern: accumulation, euphoric peak, and bear market. Fidelity's Jurrien Timmer argues that 2026 could mark a "year off," with Bitcoin testing support in the $65,000–$75,000 range and entering a one-year bear phase. This aligns with Grayscale's observation that Bitcoin's 2026 rally may already be priced in, with a bearish correction likely after a first-half all-time high.

However, critics argue the cycle is losing relevance. Bitwise CIO Matt Hougan contends that structural changes-diminishing halving impact, falling interest rates, and institutional adoption-will break the four-year pattern, pushing Bitcoin to new highs. CoinShares' 2026 outlook echoes this, projecting scenarios where Bitcoin could hit $170,000 in a Fed crisis or fall to $70,000–$100,000 in stagflation. The key question is whether Bitcoin's price is still tethered to its own supply-driven cycles or has evolved into a macroeconomic asset class.

Challenging the Halving Narrative: Benner Cycle and Real Estate Cycles

Two long-standing economic models complicate the four-year cycle's dominance. The Benner Cycle, first proposed in 1875, identifies recurring 18-year booms and busts in global markets. Its original chart labels 2026 as the "Years of Good Times, High Prices", suggesting a bull market. Similarly, the 18-Year Real Estate Cycle projects 2026 as a peak, reinforcing the idea that Bitcoin may align with broader economic rhythms rather than its own supply mechanics.

These models challenge the notion that Bitcoin's 2026 trajectory is solely dictated by halving events. Instead, they imply that Bitcoin's role as an alternative store of value is now intertwined with macroeconomic trends, such as liquidity shifts and inflation dynamics. As Hougan notes, falling volatility and a declining correlation with stocks could create a "favorable trifecta" for Bitcoin in 2026.

ETF-Driven Flows: A New Era of Institutional Adoption

Institutional adoption is reshaping Bitcoin's market dynamics. Global crypto ETPs have seen $87 billion in net inflows since 2024, with U.S. Bitcoin ETFs growing 45% in AUM to $103 billion. These vehicles are bridging the gap between traditional finance and crypto, as less than 0.5% of U.S. advised wealth is currently allocated to crypto-a figure expected to rise.

For many institutional investors, Bitcoin is no longer a speculative asset but a strategic allocation. SSGA highlights its role as an alternative store of value amid macroeconomic uncertainty, with registered vehicles offering regulatory clarity. This shift suggests that Bitcoin's price may be less sensitive to halving events and more responsive to institutional demand and liquidity conditions.

Macro Risks: A 60% Drawdown in 2026?

Despite bullish narratives, macroeconomic risks cannot be ignored. 10x Research founder Markus Thielen warns of a 60% Bitcoin drawdown in 2026, driven by U.S. midterms and shifting Fed policy. Historical midterm cycles have seen Bitcoin decline by ~60% unless dovish Fed actions or low inflation offset the bearish pressure. CoinShares' bearish scenario also factors in stagflation, projecting a drop to $70,000–$100,000.

On-chain signals and weakening institutional flows add to the risk. If leveraged long positions unwind or liquidity tightens, Bitcoin could face a sharp correction. However, this scenario hinges on the Fed's policy path and global economic stability-variables that remain unpredictable.

Conclusion: Navigating the Uncertainty

Bitcoin's 2026 trajectory hinges on whether it remains bound by its four-year cycle or evolves into a macroeconomic asset. While the Benner Cycle and institutional adoption suggest a bullish outcome, macro risks like Fed policy and midterms could trigger a 60% drawdown. Investors must balance these narratives: hedging against volatility while positioning for long-term growth.

For now, the market is in a test phase. If Bitcoin breaks the four-year cycle and hits new highs in 2026, it will signal a maturation of the asset class. But if the bearish reset materializes, it will reaffirm the cyclical nature of crypto markets. Either way, 2026 will be a defining year for Bitcoin's role in the global financial system.