Bitcoin's 2025 Peak: Is This the Post-Halving Digestion Phase or a New Bull Trap?

The debate is now a full-blown narrative war. On one side, the "WAGMI" (We're All Gonna Make It) crowd is still chasing the moon, pointing to the October spike. On the other, a prominent bear is shouting "NGMI" (Not Gonna Make It). That voice belongs to analyst Benjamin Cowen, who argues the post-halving cycle is over.

Cowen's thesis is clear: Bitcoin completed its post-halving cycle in Q4 2025. He sees the market now in a post-cycle "digestion phase," not the start of a fresh rally. His central call is that Bitcoin's price may have already peaked in 2025 and is unlikely to enter a new sustained bull market in 2026. For him, the setup is about capital preservation, not expansion.

This isn't just a call for a pause; it's a call to hunker down. The market's own behavior in Q4 2025 supports this view. Instead of a year-end rally, the market sold off hard, with Bitcoin's correction followed all-time highs in October 2025. The report notes that investors this quarter were more focused on preserving their capital than trying to trade the market. That shift in sentiment, coupled with accelerating ETF outflows, shows the risk-reward profile has flipped. The game is no longer about catching the next leg up; it's about protecting what you have.

And when you look at the numbers, the "peak" looks weaker than it first appears. The nominal spike above $126,000 in October is impressive on the surface. But when adjusted for inflation, it tells a different story. According to Galaxy Digital's Alex Thorn, Bitcoin's high this year was $99,848 in 2020 dollars. In real terms, it never broke the $100,000 barrier. That inflation-adjusted ceiling is the real psychological and technical level to watch. For Cowen and the NGMI camp, that's the signal that the cycle's peak was already in the books. The battle now is about whether the market can break that adjusted high or if it's destined to grind lower.

The Bull Case: Counter-Narrative Fuel

While the NGMI crowd is calling for a retreat, the bulls are lining up fresh fuel for a new push. The recent rally above $97,000 isn't a fluke; it's a direct reaction to a shift in the macro environment. The catalyst was stable inflation data, which re-ignited expectations that the Federal Reserve could start cutting rates. That's the kind of liquidity tailwind that crypto loves. As Fundstrat's Sean Farrell noted, this momentum continues in the coming days, and the market is pricing in that lower-rate future.

The setup for 2026 also fits the traditional post-halving playbook. Historically, this period is when the expansion phase builds momentum, provided the liquidity backdrop supports it. Right now, that backdrop is improving. As one analysis points out, many major central banks are nearing the end of their tightening cycles, and the opportunity cost of holding non-yielding Bitcoin declines when rates fall. That's the core thesis: a more supportive monetary environment could finally let the underlying supply dynamics shine.

And those supply dynamics are tightening. The post-halving reset has been brutal for miners, who now get half the rewards, leading many to scale back. More importantly, on-chain data shows exchange reserves are at their lowest since 2018. Coins are moving less, with a lot of BTC now locked away in long-term wallets and corporate treasuries. This thinning of active supply creates a natural floor and sets the stage for a breakout if demand ever returns in force.

The conviction among the bull camp is palpable. A growing number of investors think Bitcoin might end the year above the $200,000 price level. That's not just a wish; it's a signal of strong, high-conviction belief that the cycle isn't over. Firms like Nexo and Bit Mining are looking at targets in the $150K-$225K range, and even Tom Lee of Fundstrat is calling for $250,000. This isn't a whisper; it's a chorus of optimism that the market is still listening to.

The bottom line is a battle of narratives. The NGMI call is about capital preservation after a brutal Q4. The bull case is about catching the next liquidity-driven leg up in a historically favorable cycle window. The market's recent move above $97K shows the counter-narrative has legs. Now it's about whether that momentum can break through the psychological resistance and the inflation-adjusted ceiling that Cowen points to. The game is still on.

The Market's Real Story: On-Chain & Liquidity

The brutal "digestion" phase of late 2025 wasn't a quiet reset; it was a full-scale purge. The market took a record $19 billion in liquidations in a single day, a mechanical wipeout that drained liquidity and forced out the weak hands. Over six weeks, the crypto market cap lost more than $1.2 trillion, with Bitcoin shedding over 30% from its October highs. This wasn't just a correction-it was a high-volume distribution, often a late-cycle signal that the easy money is gone.

The key question now is who's left holding. The sell-off was a mass exodus, but the on-chain data suggests a more resilient base is forming. Exchange reserves are at their lowest since 2018, meaning a lot of BTC is moving less and locking up in long-term wallets and corporate treasuries. This thinning of active supply creates a natural floor. As the 99Bitcoins report noted, investors in that quarter were more focused on preserving their capital than trying to trade the market. That shift in sentiment, from chasing pumps to protecting gains, is a hallmark of a market that has been through the wringer.

So, are the diamond hands still holding? The evidence points to a cautious but committed holder base. While ETF flows paused in Q4, they didn't collapse. Over $50 billion went into spot Bitcoin ETFs in the past year, and much of that capital has stayed put. Firms like Strategy are sitting on massive BTC hoards, and their ability to act as a backstop if needed adds structural support. The market's recent recovery above $97K shows this base has enough conviction to defend key levels.

The crucial test for 2026 is whether this defensive posture can turn into offensive momentum. The market's ability to hold above $90K and build sustained upward pressure will be the litmus test. If it can, it signals the WAGMI narrative is overpowering the NGMI call. If it fails, the digestion phase may just be getting started. For now, the setup is one of a tighter, more focused market-where the survivors are the ones who can HODL through the next round of volatility.

What's Next: Catalysts & Risks

The market is now waiting for the next signal to break the stalemate between the NGMI and WAGMI camps. The primary risk is a failure to break above key resistance levels without strong fundamental catalysts. If Bitcoin can't hold above the $95,000 level and build sustained momentum, it would confirm the deeper correction narrative is still in play. The recent rally above $97K shows the bulls have legs, but it's a fragile breakout that needs to be defended.

On the catalyst front, two big things could shift the narrative. First, the passage of major crypto legislation, like the Clarity Act, is a major positive catalyst that could juice the sector. Regulatory clarity is a known tailwind, and sentiment is already cheering the possibility. Second, a potential move by the U.S. Treasury to boost its Bitcoin holdings via a Strategic Bitcoin Reserve is a speculative but powerful narrative play that could act as a backstop. These are the kinds of events that can turn a sideways market into a breakout.

The key test for 2026 is the market's ability to hold above $90K and build momentum. If it can, it signals the diamond hands are still in control and the WAGMI narrative is overpowering the NGMI call. The recent move above $97K is a good start, but the real litmus test is whether this becomes a sustained climb or just another failed pump. For now, the setup is one of high conviction but thinning liquidity, where every breakout needs a catalyst to prove it's not just noise.