Bernstein sees ‘short-term crypto bear cycle’ reversing in 2026, with bitcoin bottoming in the $60K range

Analysts at Bernstein expect the current downturn in crypto markets to give way to a recovery in 2026, even as bitcoin BTC traded 40% below its all-time highs at around $75,000 earlier on Monday.

In a note to clients, the analysts led by Gautam Chhugani said crypto may still be in a “short term crypto bear cycle,” but one it expects to reverse within the year, with bitcoin “bottoming out around its last cycle highs ~60K range,” likely in H1, before establishing a higher base.

The analysts framed the latest drawdown in the context of bitcoin’s underperformance versus gold over the past year, a period that has coincided with heavy central bank gold buying.

Bernstein noted that bitcoin’s market capitalization has fallen to roughly 4% of gold’s, near a two-year low, as central banks, including those in China and India, accelerated gold accumulation and gold’s share of global reserves climbed to about 29% by late 2025.

Bitcoin's market cap as a percentage of gold's market cap. Image: Bernstein. — Bitcoin’s market cap as a percentage of gold’s market cap. Image: Bernstein.

‘Most consequential cycle’

Despite that relative weakness, Bernstein argued the past two years marked an “institutional cycle” for bitcoin, highlighted by the sharp growth of spot bitcoin exchange-traded funds to about $165 billion in assets under management and the rise of corporate bitcoin treasuries.

The firm said these developments helped drive a strong rally before the recent correction and differentiated the current cycle from previous, more retail-driven boom-and-bust phases.

The analysts also pointed to U.S. policy dynamics as a potential catalyst. They highlighted the establishment of a Strategic Bitcoin Reserve using seized government holdings, suggesting that shifts in Federal Reserve leadership under nominee Kevin Warsh, alongside broader political alignment with the crypto industry, could create scenarios in which bitcoin is treated more seriously as a sovereign or reserve-style asset, even if such outcomes remain uncertain.

“We just don’t see a passive U.S. government if the digital asset markets keep sliding,” the analysts wrote.

On flows and market structure, Bernstein said institutional participation has so far remained resilient. ETF outflows since peak assets represent a relatively small share of total holdings, and there has been no miner-driven leverage capitulation comparable to prior cycles, the firm said. Corporate holders such as Strategy continue to add bitcoin through the downturn, acquiring about $3.8 billion year-to-date despite briefly slipping below its cost basis. Meanwhile, miners have diversified revenues toward AI-related data center activity, the analysts added.

Bernstein said these factors support its view that the current weakness may represent a late-stage correction rather than the start of a prolonged crypto winter. While near-term volatility could persist, the firm expects a 2026 reversal to lay the groundwork for what it described as potentially the “most consequential cycle” for bitcoin, with longer-term implications extending beyond traditional four-year market patterns.

Gautam Chhugani maintains long positions in various cryptocurrencies.