Why Bitcoin Stumbled in 2025 — And Why Analysts Expect a Strong Rebound in 2026

The cryptocurrency market has significantly underperformed traditional assets over the past two months, with Bitcoin and other digital currencies trailing both precious metals and stock indices. However, market analysts believe 2026 could be the year crypto closes the performance gap, driven by shifting capital flows, on-chain accumulation patterns and historical market cycles.

The Performance Gap: Crypto vs. Traditional Assets

The contrast in year-end performance is striking. Since early November:

• Gold has surged 9%
• S&P 500 climbed 1%
• Bitcoin retreated roughly 20%, currently hovering near $90,570

Looking at full-year 2025 results, the divergence becomes even more pronounced:

• Gold jumped nearly 70% year-to-date
• Silver skyrocketed approximately 150%
• Bitcoin declined about 6% over the period

This underperformance reflects investor preference for traditional hedges during periods of macro uncertainty. Precious metals emerged as the clear winners of the so-called “debasement trade” — a strategy favoring hard assets that preserve purchasing power amid fiscal pressures and accommodative monetary policy.

Technical Strength in Traditional Hedges

Gold’s rally has reached historically rare levels from a technical standpoint. The metal has maintained a position above its 200-day moving average for roughly 550 consecutive trading sessions, representing the second-longest such streak in history, eclipsed only by the post-2008 financial crisis period. This sustained strength demonstrates consistent demand for traditional stores of value as inflation concerns persist.

The Timing Explanation: Why Bitcoin Lagged Behind

Bitcoin investors had anticipated the debasement trade would propel the asset higher throughout 2025. Instead, after peaking near $126,000 in early October, Bitcoin experienced significant pullback, sliding below $90,000 by year-end.

Portfolio managers and analysts attribute this underperformance not to fundamental weakness, but to market timing and positioning dynamics. According to Re7 Capital, precious metals have historically led Bitcoin by approximately 26 weeks in macro cycles. Gold’s consolidation period last summer mirrors Bitcoin’s current pause — but history suggests when Bitcoin finally moves, it typically demonstrates greater upside torque and momentum.

Past market cycles reveal a consistent pattern: Bitcoin often trails macro hedges in the early phase, then dramatically outperforms once liquidity conditions normalize and speculative capital returns.

On-Chain Signals Point to Potential Inflection

Blockchain analysis reveals emerging indicators of a market shift. Large Bitcoin holders (whales) slowed accumulation during the second half of 2025, while smaller wallet addresses stepped up buying activity — a pattern frequently seen in late-cycle distribution phases.

Crucially, long-term Bitcoin holders have paused selling for the first time in six months, with holdings stabilizing after declining from 14.8 million BTC in July to approximately 14.3 million in December. This represents a meaningful shift in holder behavior.

Active Bitcoin addresses registered a 5.5% increase over 24 hours, even as transaction volume declined — a characteristic pattern often associated with accumulation phases rather than speculative trading.

Capital Rotation Signals Emerging

Market participants and analysts increasingly point to early signs of capital reallocation back into cryptocurrency. “The short squeeze in metals has exhausted itself,” noted one crypto market observer. “Capital is rotating back into digital assets. It’s the same capital — sell high, buy low.”

This rotation reflects a classic late-cycle positioning where markets often shift before narrative shifts, suggesting participants are front-running the broader market move.

2026 Positioning: The Probability Shifts

Prediction markets demonstrate growing conviction around crypto’s catch-up potential. Current odds reflect:

• Bitcoin: 40% probability of being the best-performing asset class in 2026
• Gold: 33% probability
• Equities: 25% probability

If macro liquidity conditions ease while geopolitical and economic uncertainties persist, Bitcoin could reassert its historical function as a high-beta hedge, potentially outperforming both precious metals and equity indices once momentum accelerates.

Looking Ahead: The Convergence Trade

Cryptocurrency’s underperformance in 2025 stands in sharp contrast to the explosive gains witnessed in traditional hedges. Yet this performance divergence may actually be laying the groundwork for a significant reversion.

With whale accumulation resuming, long-term holder selling paused, and capital rotation beginning to emerge, 2026 presents a compelling setup for digital assets to close the performance gap — or potentially surpass traditional hedges once market momentum shifts.

The opportunity for cryptocurrency to execute a catch-up rally remains firmly on the table.