Bitcoin breaks historic post-halving pattern with yearly decline

Thursday 01 January 2026 - 17:20

By: Dakir Madiha

Bitcoin breaks historic post-halving pattern with yearly decline

Bitcoin ushered in the new year trading around $87,500 on January 1, reflecting a 30% drop from its October peak and capping off a year that upended long-standing market cycles and investor forecasts. The global cryptocurrency market capitalization stood at $2.96 trillion, down sharply from a record $4.28 trillion in early October a $1.3 trillion wipeout that signals deep structural shifts, according to market watchers.

This downturn carries extra weight because Bitcoin has shattered its four-year market cycle for the first time, posting a rare red candle at the end of a halving year. After its April 2024 halving, the leading cryptocurrency was poised for explosive growth in 2025, yet it ended the year essentially flat. Market data highlights this as the first instance since the 2014 bear market where Bitcoin failed to deliver three consecutive green candles, breaking a pattern that had shaped crypto cycles since the asset's inception.

Adding to the strain, digital asset treasury firms confront an existential threat as index provider MSCI gears up for a pivotal decision on January 15. That ruling could trigger $10 to $15 billion in forced sales across 39 companies holding $113 billion in market cap. Strategy, formerly MicroStrategy, which owns over 649,000 bitcoins worth about $56 billion, risks $2.8 billion in capital outflows if excluded from key benchmarks like the MSCI USA and MSCI World indexes.

Galaxy Digital's annual report warns that at least five such treasury firms may face asset sales, mergers with larger players, or outright closures amid tightening conditions. Many traded at 3x to 10x their adjusted net asset value during the summer months but now struggle to hold even book value.

Even record inflows into cryptocurrency exchange-traded funds failed to prop up prices as expected. XRP ETFs drew $1.16 billion in cumulative flows, and Solana ETFs pulled in $763 million from institutions, yet both tokens posted steep price declines. Analysts puzzle over the gap between institutional demand and price action, pointing to market overcrowding from competing products.

The anticipated Santa Claus rally a seasonal surge from Christmas to early January also fizzled, disappointing investors amid thin holiday liquidity and a lack of fresh catalysts. Alex Thorn, head of research at Galaxy Digital, blames persistent weakness on high leverage in the system, with forced liquidations following President Trump's October tariff announcement inflicting lasting damage.

Bitcoin kicked off 2026 trading tightly between $86,000 and $89,000, while Ethereum hovered near $2,970. The market now eyes MSCI's January 15 verdict and potential institutional buying in the new year, though analysts caution against expecting a swift rebound.