Crypto traders are debating whether the 2025 pullback is another bear market or a late-cycle reset, as QE, global rate cuts and the US CLARITY Act shape the 2026 outlook.
Summary
- Bitcoin fell from key highs and broke major support as most large-cap coins posted annual losses, while only privacy plays like Monero, Zcash and BNB remained in the green.
- Macro differences, from US-UK rate cuts to Japan’s rate hikes and renewed geopolitical risk, are weighing on sentiment, even as the growing supply of stablecoins signals latent liquidity.
- The Digital Asset Market CLARITY Act, which could split SEC/CFTC oversight and end “regulation by enforcement,” will be reviewed by the Senate in early 2026.
Cryptocurrency traders and investors are wondering whether the digital asset market has entered a bear phase as 2025 draws to a close, amid continued price declines and speculation about possible regulatory changes and monetary policy shifts in 2026.
Bitcoin traded below recent highs following the release of US Consumer Price Index data and a Bank of England interest rate cut. According to market data, the combined cryptocurrency market capitalization retreated near a key trillion-dollar threshold before recovering slightly.
Of the top 50 digital assets with a full year of price history, only privacy tokens Zcash and Monero, along with Binance’s BNB token, posted positive returns for the year, according to price data. Bitcoin fell on a year-over-year basis, while numerous other major cryptocurrencies posted significant losses over the same period.
In the fourth quarter, Bitcoin (BTC) fell below a key price level and traded within a range below that threshold. The decline breached a key support level, prompting several market analysts to adopt a bearish medium-term outlook.
Peter Brandt, a market analyst, predicts a potentially serious decline in 2026, stating that each cryptocurrency bull run has produced diminishing returns and that previous parabolic developments have undergone substantial corrections. Brandt argued that the current parabolic advance was being violated and predicted that a decline from all-time highs could take prices to significantly lower levels.
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While the United States and the United Kingdom have cut interest rates, the Bank of Japan has raised its interest rates to the highest level in five years. The divergent monetary policies have increased uncertainty in global markets, potentially affecting the yen carry trade, a strategy in which traders borrow the yen at low interest rates to buy higher-yielding assets in other currencies.
Global economic uncertainty, the ongoing conflict in Ukraine and emerging tensions between the United States and Venezuela represent additional factors affecting sentiment in the cryptocurrency market, according to market observers.
According to market data, the market capitalization of stablecoins has grown significantly over the past twelve months, indicating the available liquidity within the cryptocurrency ecosystem.
The United States has made several interest rate cuts in 2025, and market prices are currently anticipating another cut, which would maintain the Federal Reserve’s quantitative easing policy. Quantitative easing typically increases liquidity by expanding the money supply and injecting capital into the financial system. Historical data shows that periods of significant quantitative easing, including during the COVID-19 pandemic, have coincided with cryptocurrency bull runs.
Industry leaders, including the founder of Binance, have expressed support for a possible supercycle thesis, suggesting that 2026 could mark the start of a new quantitative easing cycle. Some market participants argue that 2025 should not be characterized as a bull run due to that year’s quantitative tightening policies.
The White House confirmed that the Digital Asset Market CLARITY Act will be considered by the Senate as early as January, according to an official statement. The legislation will enter the committee stage, where amendments and finalization will occur before going to the floor. According to political observers, early indications indicate that the bill may be passed.
The CLARITY Act aims to clearly distinguish between tokens classified as securities and tokens classified as commodities, splitting regulatory oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission. If passed, the legislation would provide cryptocurrency companies in the United States with a more transparent regulatory framework, replacing the current regulatory system through litigation.
