Q4 2025: Closing the Year, Reassessing the Cycle

Q4 ’25 was a regime change from “up-only beta” to defensive positioning. BTC pushed to a new ATH above $126k in early October, then the market violently repriced as a combination of macro risk-off and the impending end of the four-year cycle hit, and leverage got flushed. The market now has to prove whether that playbook repeats into 2026 or finally breaks, which is what many have been anticipating.

Two things make this setup different this time. First, the composition of the marginal buyer has changed: since the launch and maturation of U.S. spot BTC ETFs and broader institutional access, flows are increasingly mediated by allocators, ETF creations/redemptions, and balance-sheet decision-makers rather than purely native leverage and retail momentum. Second, a potentially prolonged business cycle that may be ripe for re-acceleration should act as a tailwind for crypto as well. That doesn’t remove volatility, but it can change where it expresses—more flow-driven, more macro-correlated at times, and potentially more persistent demand during drawdowns if strategic allocation is underway. In a market where price is increasingly flow-set, that shift is decisive.

By late Q4 and into Q1 ’26, sentiment pushed toward capitulation: as positioning cleaned up and retail grew overly confident in the “inevitable” bear phase implied by the four-year cycle, we expect at least a technical bounce in Q1. The market attempted to break higher out of compression—another sign of a cleaner positioning backdrop after the post-ATH unwind. After the bounce, flows will decide the next direction.

Into Q1 ’26, the base case is a grind with sharp rotations rather than a straight-line trend. BTC likely remains the index exposure that absorbs most incremental liquidity, while alt beta stays episodic—on when flows are supportive, off when they are not. The key question for the four-year cycle debate is simple: do we see structural, allocation-led demand that absorbs supply across volatility events, or do we revert to the classic pattern where fading liquidity and leverage dynamics reassert and the cycle “rhimes” again.

If flows stabilize and rebuild, the path of least resistance currently is higher, albeit with repeated volatility spikes. If outflows re-accelerate—especially on a move back to the $100k–$110k zone that tests short-term holder cost basis—the market can give back gains quickly.

Either way, the framework has shifted. As 2025 comes to a close, the focus moves from chasing narratives to understanding flows, positioning, and risk as they evolve. We enter 2026 with a market that is less predictable, but more legible, and we’ll continue navigating it with discipline, curiosity, and patience. Together.