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

The coin remained volatile amid mass liquidations and macroeconomic uncertainty, according to ETWealth. WazirX Trade Desk noted that historically, Bitcoin has delivered the highest returns among crypto assets. Since 2011, it has generated cumulative returns far surpassing equities, bonds, commodities, and gold, with an annualised return of roughly 130%, despite multiple drawdowns exceeding 60%.

Also Read | Portfolio check: How to rejig your mutual fund investments in 2026“Bitcoin’s strongest performance periods have typically followed liquidity inflexion points, not peaks in optimism. Looking ahead to 2026, this is less about prediction and more about structure. Bitcoin remains one of the most liquid and institutionally referenced crypto assets. When liquidity conditions improve, it has historically been the primary channel through which crypto upside is expressed,” WazirX Trade Desk added.Nischal Shetty, Founder, WazirX, said that looking back at 2025, the crypto industry paints a mixed but hopeful picture. On one hand, the industry saw real progress: growth in DeFi projects, expansion of stablecoins, new CBDC-infrastructure pilots, and rising developer activity across APAC and globally, with millions committing to code on-chain. On the other hand, after early-year optimism from retail investors, the October correction was a reminder that sentiment remains fragile and that hype without real delivery can still hurt the industry.

Live Events

Ethereum edged down around 11% in 2025 from $3,332 on the first day of the currency calendar year to $2,972 on December 31. The global crypto market capitalisation edged down from $3.26 trillion on January 1, 2025, to $2.99 trillion as of December 31, 2025, according to CoinMarketCap.
Investor confidence has weakened notably, with Bitcoin exchange-traded funds recording $1 billion in outflows in December, adding to $3.5 billion in selloffs in November, as per DefiLlama data. (Source: Report by ETOnline)What should investors expect in 2026?
Akshat Siddhant, Lead Quant Analyst, Mudrex, said that the outlook for the crypto market in 2026 looks increasingly positive, and the recent correction has helped clear excess speculation and build a healthier base for growth.

“At the same time, major central banks are moving toward quantitative easing, with nearly $150 billion injected into the global economy in December alone, improving liquidity and global liquidity and bringing fresh capital into risk assets, including crypto.”

Also Read | Mutual funds increase cash allocation by over Rs 14,500 crore in 2025; 5 new AMCs join in

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

To this, Shetty also adds that in 2026, globally, institutional appetite for regulated digital-asset products will continue to increase, driving capital inflows and contributing to market stability and at the same time, domestic policies for countries will be key in shaping their respective investor sentiment.