Institutional Funds Reshape Bitcoin Cycle: Grayscale's Five-Year Theory and Barclays' Warning

Is the traditional “four-year cycle” for Bitcoin still effective? This question is causing a stir in the financial world. Leading digital asset management firm Grayscale recently put forward a bold argument: the traditional model is outdated, and a new five-year growth cycle now dominates the market. They predict that Bitcoin will hit a new all-time high in 2026. In contrast, UK bank Barclays takes the opposite view, believing a bear market will occur in the same year. This debate reflects a deeper issue: how institutional capital is reshaping market structure.

How Institutional Entry Changes the Game? A New Perspective on Liquidity Reasoning

Grayscale’s core logic is worth examining. They believe that the organized capital inflows driven by spot Bitcoin ETFs and corporate adoption fundamentally alter the market’s supply and demand dynamics. This is not simply “more money entering,” but a shift in liquidity reasoning—the capital brought in by institutional investors is more stable and persistent, breaking the pattern of wild parabolic rises followed by inevitable crashes during retail-driven periods.

Specifically:

• Old era’s liquidity characteristics: Retail speculation-driven, rapid and irrational capital flows, prone to bubbles
• New era’s liquidity characteristics: Strategic institutional holdings, long capital consolidation periods, forming a stable supply-demand foundation

This optimized liquidity structure, according to Grayscale, creates a more favorable upward trajectory rather than the historically volatile pattern of sharp rises followed by crashes.

Has the Halving Effect Failed? The Decline of the Four-Year Model

For a long time, Bitcoin traders viewed halving events as “timed bull triggers”—reducing supply increases scarcity, leading to price surges. But Grayscale now claims this theory is outdated. Why?

Because the injection of institutional capital has changed how supply shocks impact the market. The halving event still exists, but its effect may be rewritten by ETF demand curves:

• Institutions buy based on long-term allocations rather than chasing short-term volatility
• The supply reduction stimulus is extended over a longer period
• Price discovery logic shifts from “supply shock → quick response” to “fundamental revaluation → gradual rise”

This indicates that the market is evolving, and the probability of a deep bear market is indeed decreasing—at least according to Grayscale’s logic.

Barclays’ Cold Shower: Demand Signals Flash Red

However, Barclays’ warning should not be ignored. They point out that spot trading volume has significantly shrunk, and investor demand shows signs of weakening. In their view, these are typical precursors to a bear market, signaling that 2026 may face a price correction rather than a new high.

Both sides have data, but their interpretations differ sharply. Grayscale sees “a shift from high-frequency trading to long-term holdings”; Barclays sees “signs of waning market enthusiasm.” This divergence reflects a complex reality: the rules for interpreting market signals in the institutional era are still being rewritten.

Practical Response: Building Strategies Amid Forecast Disagreements

How should investors act in the face of expert opinions that diverge?

First, extend your time horizon. Don’t commit all your chips to 2026. Use dollar-cost averaging strategies to smooth out purchase costs and avoid risks tied to a single point in time.

Second, monitor structural indicators rather than just price. Data such as ETF net inflows, on-chain holdings distribution, and institutional capital flows better reflect the true market forces than candlestick charts.

Third, enforce strict risk management. The existence of forecast disagreements itself indicates uncertainty—never invest more than you can afford to lose.

According to the latest data, Bitcoin’s all-time high has reached $126.08K (as of January 12, 2026), providing a new reference point for subsequent price expectations.

Conclusion: A Sign of a Mature Market

The debate between Grayscale and Barclays essentially marks a milestone for Bitcoin—the market has become significant enough to attract public disputes among global financial giants. Whether 2026 ultimately hits a new high or faces correction, the structural evolution of the market is irreversible. The entry of institutional capital, shifts in liquidity reasoning, and updates to cycle models are shaping a more complex, mature, yet more unpredictable ecosystem.

The exact timing of the next Bitcoin all-time high remains a mystery, but this debate proves one thing: cryptocurrencies have permanently entered the mainstream financial arena, and their future will be shaped by a more diverse set of forces.