Policy Forces Reshape Bitcoin Trading as Four-Year Cycle Weakens
Bitcoin’s price action in 2025 and 2026 has diverged from its traditional four-year cycle, as political announcements and policy moves now exert more influence than technical metrics like halvings. While equities rallied in 2025, Bitcoin lagged, reflecting a shift toward markets driven by liquidity expectations and government policies, including quasi-quantitative easing (quasi-QE) and fiscal stimulus. Heavy government spending, efforts to keep borrowing costs low, and blurred boundaries between fiscal, trade, and monetary policy are creating a backdrop of “financial repression.” This environment reduces the attractiveness of bonds and bank lending, pushing investors toward alternative assets such as crypto. The U.S. approach, marked by expansionary fiscal policy and high public debt, constrains traditional Federal Reserve action while promoting measures that indirectly support liquidity. Regulatory developments, especially the passage of the delayed crypto market-structure bill, now act as key short-term drivers for crypto markets, eclipsing on-chain signals. Institutional demand from ETFs remains supportive, but policy outcomes will play a crucial role in shaping institutional behavior and overall demand for digital assets through 2026.
