A new market paradigm has taken hold—policy announcements are now exerting a more significant influence on the market than internal metrics, a shift that is progressively diminishing the relevance of Bitcoin's four-year cycle. As equity markets climbed in 2025, Bitcoin's performance lagged, a phenomenon indicating that the market's current driving logic is pivoting towards liquidity expectations and policy timelines, rather than overall risk appetite. Under the traditional four-year cycle model, early 2026 should have been a period marking the cycle's end or a post-peak phase. However, actual price action suggests investors are delaying this phase transition, as the influence of policy signals now outweighs the cycle规律 based on the halving mechanism. Ryan Yoon, a senior analyst at Seoul-based Tiger Research, stated in an interview: "Bitcoin reacts in anticipation when the market expects policies resembling quantitative easing. Given Bitcoin's high sensitivity to liquidity, the market anticipates it will lead market trends." Policies resembling quantitative easing refer to measures that release liquidity support and suppress borrowing costs through fiscal or administrative channels, distinguishing them from a central bank's formal asset purchase operations. A policy paradigm is emerging. Pre-election fiscal stimulus measures and blurred monetary policy boundaries are driving this transformation, creating the broad context of "financial repression" described in Binance's "2025 Full-Year Review and 2026 Trend Outlook Report." The report notes that Trump's import tariff policies, pressure on Fed Chair Jerome Powell to cut interest rates, and various other policy interventions are continuously blurring the lines between fiscal, trade, and monetary policy. The consequence is that U.S. policy focus has shifted towards suppressing borrowing costs and managing financial conditions through fiscal expansion and administrative means, rather than employing traditional monetary tightening. The report states: "Overall, the combination of a fiscally dominant landscape and a state of financial repression creates a structurally supportive market environment for digital assets. Expansionary fiscal policy paired with suppressed real yields is eroding the appeal of traditional sovereign debt; simultaneously, distortions in the regulated credit market are enhancing the investment attractiveness of alternative financial channels." In other words, massive government spending and a policy-driven low-interest-rate environment are continuously weakening the appeal of bonds and bank credit, prompting investors to turn their attention to alternative assets like cryptocurrencies. The report further adds that governments, led by the United States, are pushing forward with multi-trillion-dollar spending plans ahead of the 2026 midterm elections; meanwhile, high public debt is increasingly seen as potentially constraining the Fed's policy space and raising the risk of QE-like policies being implemented through administrative channels. What does the future hold? Policy forces, potentially combined with the ongoing trend of institutional demand, are poised to play a key role in shaping Bitcoin's market outlook for 2026. Progress on long-pending cryptocurrency market structure legislation is becoming a core driver of prices, its importance now surpassing traditional on-chain metrics. This implies that short-term market catalysts lie primarily in the regulatory domain. Peter Chung, Head of Research at Presto Research, said in an interview: "With crypto industry lobbying funds exceeding $100 million and the November midterm elections approaching, U.S. lawmakers have every incentive to push for legislation favorable to the crypto industry." He further added: "Market narratives are always evolving dynamically. Right now, it's reasonable to focus on legislation like the 'Crypto-Asset Responsibility and Transparency Act,' as such a bill will determine the industry's long-term development trajectory." Can Ethereum Outperform Bitcoin in 2026? While institutional demand fueled by exchange-traded funds remains a structural support, the direction of policy developments will dictate institutional investment thinking and, consequently, the scale of that demand. Peter Chung concurred with this view: "Policy will undoubtedly affect institutional demand, especially considering that institutional investors focus more on long-term fundamental factors." Ryan Yoon holds a similar view, believing that policy direction will determine whether the latent potential demand from governments and institutions can be converted into actual purchasing power. He pointed out: "The next twelve months are a critical window. If the timing of these bills' passage does not align with a liquidity expansion cycle, their impact will be quite limited."
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