Will the crypto market take off in 2026? Signals from institutional allocation and the supply side.

[Chain News] Recently saw an interesting market research report that summarized the core characteristics of the Crypto Assets market in 2025—fundamentals and price performance are completely two different matters.

Looking back at the situation in 2025 is indeed a bit helpless. The United States established a strategic Bitcoin reserve, the Trump administration promoted the inclusion of 401(k) into digital assets through executive orders, and changes in the SEC leadership brought about a regulatory shift… these positive developments came one after another, but Bitcoin's performance was not as bright as expected. Instead, early holders massively sold off, and combined with market structure adjustments, even though volatility hit a historic low, Bitcoin still underperformed compared to US stocks and gold.

That said, the expectations for 2026 are much more optimistic. Some analyses predict that Bitcoin will outperform stock indices and gold again, with the key reason being that the positive impact of regulatory support will outweigh the pressures of capital allocation.

The macro environment is worth paying attention to. It is expected that Trump will appoint a dovish Federal Reserve chairman, replacing the previous tightening policy with an expansionary one. This “money plentiful” environment is naturally favorable for scarce assets like Bitcoin.

There is a specific timeline on the regulatory front: The “Clarity Act” is expected to pass in the first quarter, and there will also be broader crypto legislation signed in the early part of the year. These are substantial advancements.

Actions on the institutional side are more worthy of expectation. Morgan Stanley plans to allow advisors to allocate 0-4% of Bitcoin ETFs for clients starting January 1, 2026—although the proportion is not large, it represents a shift in attitude from traditional financial giants. E*Trade's retail crypto trading is expected to launch in the first half of the year, which means that retail participation will also significantly increase.

There are several key points in data forecasting: the net inflow of ETFs is expected to exceed the levels of 2025; MicroStrategy is not expected to reduce its holdings of Bitcoin (although it may be removed from the MSCI index); the net absorption of the entire industry's financial sector is expected to be 150,000 BTC, which is 330,000 less than in 2025, but still represents a net positive contribution.

The signals from the supply side are also shifting. The supply of Bitcoin held for the long term (over 2 years) is expected to end its downward trend and rise to over 12.16 million coins by the end of the year. This means that the early selling pressure is dissipating, and the market may shift to net buyer demand.

The last factor that cannot be ignored is the comprehensive openness of the 401(k) plan. Once this policy is fully implemented, the potential buying scale will be quite considerable with different allocation weights of 1%-5%. This is not a matter of one or two months, but rather the potential for capital inflow over many years.

Overall, the crypto market in 2026 may really enter a different phase - with increased regulatory certainty, higher institutional participation, and alleviated supply pressure. These factors combined do indeed increase the probability of Bitcoin finding its upward momentum again.