Crypto Cycle Turns; Flags 2026 Triggers

What to Know:

• Wintermute suggests the traditional four-year crypto cycle is over, with institutional flows now primarily driving market dynamics.
• The introduction of Bitcoin and Ethereum ETFs has created “walled gardens,” concentrating liquidity in a few large-cap assets.
• XRP could benefit from the expansion of ETF mandates to include more cryptocurrencies, potentially unlocking new liquidity.

The cryptocurrency market may be entering a new era, according to Wintermute, a leading trading firm. Their recent analysis suggests the familiar four-year boom-and-bust cycle, historically tied to Bitcoin’s halving events, is no longer the primary driver of market performance. Instead, institutional capital flows are increasingly shaping the landscape, with significant implications for liquidity distribution and asset performance. This shift necessitates a revised understanding of market dynamics and potential catalysts for broader recovery.

End of the Four-Year Cycle

Wintermute argues that the “four-year cycle is dead,” basing this conclusion on their 2025 over-the-counter trading data. The data reveals a departure from the traditional pattern where gains from Bitcoin would cascade into Ethereum, major tokens, and eventually smaller altcoins. Instead, 2025 was characterized by concentrated capital flows, primarily directed towards a select few assets.

ETF Impact and Liquidity Concentration

The introduction of spot Bitcoin and Ethereum ETFs has played a significant role in this shift. While these ETFs have brought sustained demand for the underlying assets, they have also created what Wintermute describes as “walled gardens.” New institutional liquidity has largely remained confined to these large-cap assets, failing to trickle down into the broader crypto market. This dynamic has resulted in shorter altcoin rallies and a lack of fresh capital for smaller projects.

Potential Catalysts for Market Expansion

Wintermute identifies three potential triggers that could broaden market participation and reverse the current concentration of liquidity. The first is the expansion of ETF and digital asset trust (DAT) mandates to include a wider range of cryptocurrencies. The firm notes early signs of this trend, including filings for Solana and XRP ETFs. Recent data indicates renewed net inflows into spot XRP ETFs, suggesting growing institutional interest.

Bitcoin and Ethereum Performance

The second potential catalyst is strong price performance from Bitcoin or Ethereum. A significant rally in either could generate a wealth effect, encouraging investment in other digital assets and reviving the capital transmission seen in 2024. However, the likelihood of such a rally is subject to debate among analysts.

Return of Retail Investors

The third, and considered least likely, catalyst is a return of retail investor interest to the crypto market from other speculative asset classes. This would bring new capital inflows and stablecoin minting, providing a boost to the broader market. While immediate price spikes may not be necessary, underlying network growth, as demonstrated by Ethereum’s record for new wallet creation, suggests the potential for future expansion.

Implications for XRP and Market Structure

The evolving market structure, driven by institutional capital flows, has significant implications for XRP and other altcoins. The expansion of ETF mandates to include XRP could unlock new liquidity and drive institutional adoption. However, the success of XRP and the broader market hinges on these catalysts successfully broadening liquidity beyond the current concentration in Bitcoin and Ethereum. The market’s future performance will depend on capital flow dynamics rather than predictable historical cycles.

Related: XRP Liquidity Signals Turn After Negative Funding

Source: Original article