Bitcoin falls 5% through 2025, down 30% from its October peak. Will institutional inflows and policy support bring stability in 2026?

Bitcoin ended 2025 down nearly 5.33% to $88,474 on December 31, compared to $93,462 at the start of the year. The cryptocurrency corrected 30% from October’s record high of $126,300.According to ETWealth, the currency remained volatile amid mass liquidations and macroeconomic uncertainty. WazirX Trade Desk noted that Bitcoin has historically delivered the highest returns among crypto assets. Since 2011, it has generated cumulative returns that far exceed those of stocks, bonds, commodities and gold, with an annualized return of roughly 130%, despite multiple declines of more than 60%.

Also read | Portfolio check: how to adjust your investment fund investments in 2026“Bitcoin’s strongest performance periods have typically followed liquidity inflection points rather than peaks in optimism. Looking ahead to 2026, it’s less about prediction and more about structure. Bitcoin remains one of the most liquid and institutionally referenced crypto assets. When liquidity conditions improve, this has historically been the primary channel through which the benefits of cryptocurrency are manifested,” WazirX Trade Desk added.Nischal Shetty, founder of WazirX, said that looking back at 2025, the crypto industry paints a mixed but hopeful picture. On the one hand, the industry saw real progress: growth in DeFi projects, expansion of stablecoins, new CBDC infrastructure pilots, and increasing developer activity in APAC and globally, with millions committing to code on-chain. On the other hand, the October correction, following the optimism of retail investors at the beginning of the year, was a reminder that sentiment remains fragile and that hype without real results can still damage the sector.

Ethereum fell about 11% in 2025 from $3,332 on the first day of the currency calendar year to $2,972 on December 31. The global cryptocurrency market cap fell from $3.26 trillion on January 1, 2025 to $2.99 ​​trillion on December 31, 2025, according to CoinMarketCap.

Investor confidence has weakened significantly, with Bitcoin exchange-traded funds recording outflows of $1 billion in December, adding to November’s $3.5 billion sell-off, according to DefiLlama data. (Source: ETHOnline report)What can investors expect in 2026?
Akshat Siddhant, Lead Quant Analyst at Mudrex, said the outlook for the crypto market in 2026 is looking increasingly positive, and the recent correction has helped remove excess speculation and build a healthier foundation for growth.“At the same time, major central banks have been moving toward quantitative easing, injecting nearly $150 billion into the global economy in December alone, improving liquidity and injecting fresh capital into risky assets, including cryptocurrencies.”

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Siddhant added that on-chain data reinforces this view as Bitcoin and Ethereum exchange reserves are near all-time lows, indicating lower selling pressure and in such circumstances, even modest demand could have an outsized impact on prices. “Combined with improving regulatory clarity in key economies, these factors set the stage for a potentially strong and more sustainable crypto bull run in 2026.”

Shetty also adds that by 2026, institutional interest in regulated digital asset products will continue to increase globally, driving capital inflows and contributing to market stability. At the same time, countries’ domestic policies will be crucial in shaping their investor sentiment.