The recent 30% decline in Bitcoin has not deterred Grayscale Research, which claims this dip aligns with historical trends and is unlikely to indicate a prolonged downturn. In a report released on December 1, the asset management firm expressed confidence in Bitcoin (BTC) reaching new heights in 2026, despite the presence of mixed short-term indicators.
This latest pullback marks the ninth significant drop since the current bull market commenced. Historically, since 2010, Bitcoin has endured approximately 50 declines of 10% or more, averaging a 30% peak-to-trough decline. Grayscale noted, “Bitcoin investors have been rewarded for HODL-ing, but they”ve had to endure tough drawdowns along the way.” The most recent decline began in early October, culminating in a 32% drop, although Bitcoin has since rebounded, now trading over 6% higher in the $90,000 range.
Grayscale has dismissed the prevailing “four-year cycle” theory that predicts a downturn in 2026. The firm argues that the current market cycle is different, characterized by a lack of a parabolic blow-off top, increased institutional engagement through exchange-traded products (ETPs), and a supportive macroeconomic environment. Furthermore, Grayscale identifies potential signs of a short-term bottom taking shape, citing heavily skewed put options and digital asset treasuries trading below their net asset values as indicators of reduced speculative excess.
In November, various sectors within the cryptocurrency market exhibited stark performance disparities. Privacy-focused tokens such as Zcash and Monero outperformed, although Zcash faced a 24% plunge on one day, raising concerns about further declines. Despite these fluctuations, the long-term prospects for privacy initiatives remain robust, bolstered by developments like Ethereum-related privacy projects and Vitalik Buterin”s new privacy framework introduced at Devcon.
On the regulatory front, the landscape for crypto exchange-traded products is expanding, with the introduction of new ETPs for XRP and Dogecoin following U.S. regulatory approvals. Grayscale pointed out that macroeconomic conditions could act as significant catalysts for a market rally as we approach the end of the year. Anticipated interest rate cuts at the Federal Reserve”s upcoming meetings could weaken the U.S. dollar and stimulate demand for assets including Bitcoin and gold.
Additionally, bipartisan legislative progress concerning crypto market structure may reshape institutional participation, especially if crypto remains a non-contentious issue leading up to the 2026 midterm elections. Grayscale emphasizes that despite short-term volatility, long-term holders are likely to reap the most significant rewards, stating, “Eventually fundamentals and valuations will converge,” and expressing optimism for the outlook heading into 2026.
