Bitcoin could revisit highs in 2026 on weaker US dollar and tight supply

Bitcoin could move back towards its highs next year, thanks to easier financial conditions, a weaker US dollar and persistent exchange-traded fund inflows, market experts say.

One important factor in the short term is US dollar liquidity and the outlook for US interest rates, says Carsten Menke, head of next-generation research at Swiss private bank Julius Baer.

“Bitcoin typically does well in times of ample liquidity, to which lower US interest rates are adding," he says. "It typically also benefits from periods of US dollar weakness, considering that it is designed as ‘anti-US dollar’.

“A second important factor is the interaction of supply and demand. Supply is constrained by the blockchain, and during the past two years has not been sufficient to meet the demand from spot Bitcoin ETFs and digital asset treasury companies. Furthermore, we have seen increasing accumulation of Bitcoin by long-term holders, which has aggravated the supply squeeze.”

Mohanad Yakout, senior market analyst at broker Scope Market, says if the US dollar weakens in tandem with Federal Reserve rate cuts, it would reduce real yields across traditional fixed-income markets. In a context of declining confidence in fiat purchasing power, investors may increasingly seek “scarce assets”.

Bitcoin’s fixed supply positions it as a “digital alternative to gold”, particularly when bonds fail to provide adequate inflation-adjusted returns, he explains.

The world’s largest cryptocurrency is down about 30 per cent from its October value and on track for its worst quarterly performance since the second quarter of 2022, when the collapse of TerraUSD and Three Arrows Capital rocked the industry.

After spending much of early 2025 trading like a risk-on asset, the token has failed to join the year-end rally. It is down more than 7 per cent for the year and was trading at $89,008 at 10:40am UAE time on Friday.

Other factors

ETF flow durability is among other important factors set to shape Bitcoin prices next year. Were 2024 and 2025 a one-off adoption burst or the start of steady allocation behaviour through advisers and model portfolios, asks Tony Hallside, chief executive at brokerage firm STP Partners.