Core Viewpoint - Bitcoin's price is influenced by a combination of long-term macro trends and short-term market-specific events as it approaches 2026 [1] Long-term Factors - The long-term factors affecting Bitcoin include global M2 money supply, disinflationary supply growth of Bitcoin, and its adoption [2] Short-term Drivers - Short-term drivers consist of market risk sentiment, interest rates, U.S. dollar strength, seasonality, central bank excess liquidity, supply of large Bitcoin wallets, and financial contagions [2] Current Market Conditions - As 2026 begins, several short-term variables are aligned favorably for Bitcoin, with tight credit spreads and a reduction in speculative derivative positions that contributed to the late 2025 selloff [3] - A supportive "risk-on environment" in equities is expected to benefit Bitcoin as it is viewed as a high-risk asset [3] Monetary Policy Impact - Monetary policy may provide a tailwind, with expectations of lower interest rates and a weaker dollar in the current year, alongside supportive liquidity from the end of quantitative tightening and renewed balance sheet expansion [4] Adoption Challenges - Adoption may slow in the first half of the year due to late-2025 volatility, but there is potential for improvement if regulatory clarity increases, particularly with the potential passage of the Clarity Act [4] Halving Cycle Considerations - The third year of the halving cycle has historically been challenging for Bitcoin, which may impact prices due to investor behavior following this cycle theory [5] - Historically, Bitcoin has gained about 70% from its annual low each year since 2017, but returns in 2026 are expected to fall short of this average [5] Correlation with Traditional Assets - There may be a shift in Bitcoin's correlation with traditional assets, with expectations that it will become less correlated to broader equity indexes, although it remains correlated to large-cap AI stocks [6]