Crypto Cycle Broken : New Rules For A New Era

The crypto market is entering a major zone of uncertainty. According to Wintermute, the historic four-year cycle, a pillar of investment strategies for over a decade, may have reached its limits. In a report published in early January, the market maker mentions a deep break in 2025, a strong signal that 2026 will not be a simple rebound, but a true test of resilience for an ecosystem undergoing redefinition.

The erosion of a historic cycle

According to Wintermute, the year 2025 marks a clear break with the traditional crypto market pattern, while crashes are becoming increasingly common.

“The year 2025 showed that the traditional four-year cycle is becoming obsolete”, states the report. The cyclical model, long seen as a reliable compass for investors, no longer seems to have the same impact.

The phenomenon of “recycling”, the mechanism by which gains realized on Bitcoin and Ether are then reinvested in altcoins, has shown clear signs of exhaustion. The market maker notes a drastic drop in “market breadth”, which means the market’s ability to see multiple assets rising simultaneously.

Wintermute identifies several concrete elements that contributed to this cycle break :

• A reduction in the average duration of altcoin rallies : about 20 days in 2025, compared to 60 days the previous year, reflecting rapid exhaustion of bullish phases outside BTC/ETH ;

• Liquidity concentration : capital massively moved towards a handful of “large caps” assets, notably due to the emergence of Bitcoin spot ETFs in the United States ;

• Increased dominance of institutional flows : “liquidity concentrated on a small group of large-cap assets”, notes Wintermute, describing a market increasingly polarized around major assets ;
• The absence of narrative rotation : unlike previous cycles, few emerging tokens benefited from prolonged enthusiasm or strong speculative stories to support their prices.

This structural change implies a rebalancing of market dynamics, now driven upward by institutional management logics rather than mass effects or speculation.

Three levers for a crypto rebound this year

Faced with this severe diagnosis, Wintermute does not just observe. The company sketches three exit scenarios.

First, it envisions that ETFs and crypto treasury companies expand their mandate beyond BTC and ETH. This institutional diversification would redistribute liquidity to other assets and revive market depth.

Next, the hypothesis of a strong rebound of Bitcoin and Ether remains on the table: a sufficiently marked performance could generate a “wealth effect” conducive to a broader recovery. Finally, the return of retail investors is identified as a decisive factor. “The return of retail investor attention” writes Wintermute, while acknowledging that it is currently directed towards artificial intelligence, stock markets, and commodities.

But bringing back retail investors will not be an easy task. The scars of the 2022–2023 bear market, massive losses, high-profile bankruptcies, and cascading liquidations, are still present in minds. Moreover, in 2025, BTC and ETH generally underperformed sectors like AI, robotics, or space, which strengthened small holders’ disinterest.

Wintermute observes that retail investors now prefer cautious strategies, such as dollar-cost averaging in the S&P 500, or are turning towards more promising technological themes in the short term.

Beyond investor behavior, monetary policy will also play a decisive role. Owen Lau, director at Clear Street, believes that one of the major catalysts for the crypto market will be linked to the action of the U.S. Federal Reserve : “Fed rate cuts are among the main catalysts for the crypto market in 2026”. Monetary easing, with lower rates, could stimulate risk appetite and encourage capital flow back into cryptos.

The power law model predicts a major test for Bitcoin. If 2026 confirms this hypothesis, the market will have to demonstrate that it can evolve without its former benchmarks. More than a cycle, a new reading of crypto dynamics is emerging, where only solid catalysts will make the difference.