Deep bear market, consolidation at the bottom, institutional bull market: Three scenarios for 2026 and survival guidelines

-Are old BTC investors cashing out and leaving the market at lightning speed?

-The past 30 days have seen the most intense selling by long-term holders of more than five years.

Three possible paths over 26 years. Why is this the most probable? Save this for comparison - please be gentle with your comments.

In October, BTC hit a new all-time high. The entire internet was saying, "This round could reach 200,000."

Two months have passed:

-BTC dropped to $86,000 (-31%)

-ETH drops to 2,800 (-30%)

Grayscale says "BTC will reach a new high in 26 years".

Wall Street says "25 years have ended uneventfully."

Long-term holders dumped shares; ETFs experienced a back-and-forth struggle; retail investors faced margin calls and exited the market.

So the question is: Will there be a bull market in 2026? What will 2026 look like? And how should we respond?

01. How the bull market narrative collapsed in two months.

October high: $126,000.

What was the market discussing at that time?

"This cycle is different; institutional investors have entered the market."

“ETFs brought continuous buying, and BTC first went to 15 and then to 20.”

Everyone is calculating how many times they can earn.

The correction began in November.

Powell's hawkish remarks at the FOMC meeting caused market hesitation. Expectations for rate cuts shifted from "25bp cuts each time" to "a possible pause in rate cuts."

But at this point, most people were still saying, "A pullback is a buying opportunity."

In December, the narrative changed completely.

On December 11th, the Federal Reserve cut interest rates by 25 basis points, but the dot plot indicates that there may only be one rate cut in 2026. The market wants "continuous quantitative easing," but Powell has offered "a symbolic rate cut, with future tightening."

On December 16th, BTC fell below $85,000. In the past 24 hours, 184,600 people were liquidated, with a total amount exceeding $600 million.

On December 18th, BTC struggled around $86,000, down 6.5% for the week. Ethereum fared even worse, falling below $2,900, down 15% for the week.

It only took two months to go from "I can reach 200,000" to "Can I hold onto 80,000".

This is how fast the bull market narrative collapses.

02. This is not a normal pullback.

Many people say, "A correction is normal; the bull market is still going strong."

But this time, there are three signals that are different from the past.

Signal 1: Long-term holders are fleeing.

According to data from K33 Research, since the beginning of 2023, the number of Bitcoins held for more than two years has decreased by 1.6 million, worth approximately $140 billion.

CryptoQuant data shows that the past 30 days have been one of the most intense periods of selling by long-term holders in more than five years.

These are the "diamond hands," people who weathered the 2022 bear market, believers who think "long-term holding guarantees success."

What are they doing now? Selling.

Moreover, it's not about selling at the high point (taking profits), but selling at the current position (retreating).

Signal 2: Institutional buying is caught in a tug-of-war, and continuous capital inflows have been interrupted.

According to the latest data from SoSoValue, institutional funds are no longer blindly buying, but have entered a period of volatility.

As of the week ending December 17, Bitcoin spot ETFs saw a net outflow of approximately $177 million.

Looking back at the data from the past month, institutional funds have been fluctuating wildly (net inflow of 286 million last week, and outflow of 177 million this week).

The narrative of "continuous net inflows" that the market relied on in the past has been shattered.

The current ETF fund flows lack continuity, and this hesitant "two steps forward, three steps back" attitude has caused the BTC price to lose its most solid bottom support.

Meanwhile, trading volume in the derivatives market is also shrinking. Spot funds are hesitant, leveraged funds are withdrawing, and the market is in an awkward phase of liquidity shortage.

Signal 3: This is not a leveraged market crash, but rather selling pressure in the spot market.

In the past, sharp declines were often caused by a chain reaction of margin calls triggered by high leverage, which came and went quickly.

But this time is different.

The drop in BTC from 100,000 to 86,000 was not due to a sudden liquidation one day, but rather a continuous, slow, spot-driven decline.

Bloomberg analysts described this decline as a "slow bleeding." It's harder to reverse than a leveraged collapse because the sellers weren't forced to liquidate their positions; they were voluntarily leaving the market.

What did they see that we didn't?

03. Grayscale vs. Wall Street: Who's lying?

There are currently two opposing views in the market.

Gray Optimism

Grayscale clearly stated in its 2026 outlook report that the crypto market will usher in the dawn of the "institutional era," and the price of Bitcoin may reach a new all-time high in the first half of 2026.

What is their logic?

- Long-term holders' selling has come to an end.

Institutional demand is expected to increase in 2026 (pension funds, sovereign wealth funds, etc.).

The Trump administration's crypto-friendly policy will be implemented in 2026.

The Bitcoin halving effect will become apparent in 2026.

Wall Street's caution

However, Wall Street analysts have given a completely opposite assessment: 2025 will end "flat", and they are cautious about a significant market rebound before the end of the year.

What they saw was:

-The Federal Reserve may cut interest rates fewer times than expected in 2026.

Japan's interest rate hikes will continue to drain global liquidity.

Concerns about an AI bubble put pressure on risk assets.

The strong correlation between Bitcoin and tech stocks makes it a "risk asset" rather than a "safe-haven asset".

Who is lying?

They probably weren't lying.

Grayscale is an asset management company, and their stance is "bullish" because the assets they manage need to appreciate in order to generate management fees.

Wall Street analysts are taking a “cautious” stance because if they are bullish but the market falls, their clients will blame them.

The truth may lie somewhere in between: 2026 will not be a deep bear market, nor will it be a violent bull market. More likely, it will be a volatile, grueling year of sideways trading that will make everyone uncomfortable.

04. Three Possibilities for 2026

Based on the current market structure and macroeconomic environment, I have deduced three possibilities.

Possibility 1: A deep bear market (probability less than 20%)

Triggering conditions:

• The Federal Reserve will not cut interest rates in 2026, and may even raise them.
• Japan's continued interest rate hikes have led to a large-scale unwinding of yen carry trades.
• The US tech stock bubble burst, with the Nasdaq falling more than 30%.

In this scenario:

• BTC may fall to $60,000 or even lower.
• ETH may fall back below $2,000
• A large number of altcoins went to zero.
• Retail investors have completely exited the market, leaving only institutional investors accumulating shares at the bottom.

This is the worst-case scenario, but it's unlikely. The Federal Reserve is unlikely to raise interest rates during an economic slowdown, and the Trump administration will also exert pressure for looser monetary policy.

Possibility 2: Consolidation and bottoming out (60% probability)

This is the most likely scenario.

Throughout 2026, BTC fluctuated between $70,000 and $100,000. There was no surge or crash, just a period of consolidation.

feature:

• Every time the price rises to 95,000, long-term holders sell off their shares.
• Every time the price drops to 75,000, some institutions buy in small amounts.
• ETF fund inflows and outflows are basically balanced
• Trading volume remained low, and volatility decreased.

This is the most agonizing scenario. Those who chase the rising prices get trapped, those who try to buy at the bottom never see a big surge, and leveraged traders are repeatedly liquidated.

However, this is also a good time to accumulate shares. If you are patient, the period of consolidation and bottoming out is the most suitable stage for dollar-cost averaging.

Possibility 3: Institutional investors are bullish (20% probability)

Triggering conditions:

• US pension funds or sovereign wealth funds may allocate large amounts of BTC.
• The Trump administration launches strategic Bitcoin reserve program
• The Federal Reserve restarted QE under pressure from an economic recession.

In this scenario:

• BTC may break $150,000 in the second half of 2026.
• But this time, retail investors won't make money.
• Because the institutions were accumulating shares so quickly, retail investors didn't have time to get on board.

This is a scenario with a gray-scale expectation, but the probability is low because it requires too many "ifs" to occur simultaneously.

05. What should you do in these three scenarios?

If it's a deep bear market:

• Stop the regular investment plan immediately and keep cash.
• Buy in batches when BTC drops below 60,000.
• Don't try to buy altcoins at rock-bottom prices; they might go to zero.
• Be patient and wait for 2027; that will be the real opportunity.

If it's a bottoming process with fluctuations:

• Lower your expectations and accept the reality that you "won't make big money".
• Dollar-cost averaging in BTC and ETH, avoid leverage.
• Every major drop presents an opportunity to buy more, and every major rise presents an opportunity to sell less.
• Maintain a cash position of over 30% to be ready to respond to unforeseen circumstances.

If it's an institutional investor:

• Don't chase high prices; the characteristic of institutional bull markets is "rapid rise, rapid fall".
• If BTC breaks through 120,000, set a profit target and don't be greedy.
• Pay attention to institutional holdings data; when they reduce their holdings, you should also reduce yours.
• This kind of bull market is not a boon for retail investors, but a trap.

But regardless of the scenario, there are three ironclad rules:

• Do not allocate more than 50% of your assets to cryptocurrencies.
• Do not use leverage greater than 2 times.
• Don't believe "this time is different".

06. History doesn't repeat itself, but it always rhymes.

In November 2021, BTC hit an all-time high of $69,000.

Back then, everyone was saying, "$100,000 is just the beginning."

Then what?

The market began to correct in January 2022, falling to $17,600 in June. It was a bear market that lasted a full year and a half.

How similar is the current situation to November 2021?

All of them experienced a rapid pullback after reaching new historical highs.

The declines all began when the narrative of institutional investors entering the market was at its peak.

It was long-term holders who started selling.

The market expectation has shifted from "200,000" to "whether the key support level can be held".

History doesn’t simply repeat itself, but the rhymes are always similar.

If 2026 really is a repeat of 2022, then:

BTC may fall to $60,000 or $70,000 by mid-2026.

Then, from the end of 2026 to the beginning of 2027, it will gradually bottom out.

The real bull market may not arrive until the second half of 2027 or even 2028.

But there are also differences:

In 2022, Luna collapsed and FTX went bankrupt; the collapse was triggered by a black swan event.

In 25 years, there have been no black swan events, only tightening of macro liquidity and withdrawal of long-term holders.

This means that even if prices fall, they won't plummet like they did in 2022. But it also means that even if prices rise, they won't surge like they did in 2021.

2026 may be a year in which "nothing will happen".

07. Final Advice

If you bought at the October high, you are now down 31% on paper.

If you try to buy the dip during the December panic, you may continue to lose money.

But if you understand the logic of this article, you will understand:

2026 was not a year for making money, but a year for surviving.

In a deep bear market, preserving your principal is a victory.

In the process of consolidation and bottoming out, accumulating shares is a victory.

In an institutional bull market, being able to take profits in time is a victory.

The market will not move as you expect, nor will it move as Grayscale or Wall Street expects.

It will follow the flow of liquidity, capital, and human nature.

The only certainty is that there is no certainty for 2026.

Therefore, lower your expectations, be patient, and don't gamble.

History tells us that the people who truly make big money are not those who chase high prices at the peak of a bull market, but those who persist in dollar-cost averaging at the bottom of a bear market.

If 2026 is indeed a bear market or a year of volatility, then congratulations, you have a whole year to accumulate capital.

If 2026 truly is a bull market for institutional investors, then congratulations, at least you'll know when to exit.

I recommend saving this article. Review it every quarter of 2026.

By then, you'll know where the market is, and you'll be able to criticize me in time.