Author: cutepanda; Source: X, @cutepanda
I am completely pessimistic about the cryptocurrency secondary market in 2026. I wouldn't be surprised even if BTC falls below $50,000.
In 2026, cryptocurrencies face several major risks that cannot be ignored. I analyze them in order of importance from highest to lowest:
First, the Republican Party is highly likely to lose in the midterm elections.
This is not unfounded. On Polymarket, the Republican Party's chances of winning the House of Representatives have fallen to 22%. The public's voting power shows that the probability of the Republican Party losing the House of Representatives is more than three-quarters.
Currently, this seems almost certain. The crypto bull market of the past two years has largely benefited from the relatively lenient policy stance of the Trump administration. This laissez-faire attitude towards risk assets has driven significant increases in both US stocks and Bitcoin. If the Republican Party loses in the midterm elections, several clear negative factors will emerge: 1. Crypto-friendly policies implemented during the Trump era may be repealed or reviewed, and ongoing policies may be delayed or canceled. 2. The stablecoin USD1, highly correlated with Trump, is likely to be depegged, and related tokens (such as WLFI and Trump) will further decline to zero. 3. The regulatory environment will tighten significantly, institutions may gradually sell off Bitcoin, and exchanges will face stricter restrictions. II. Global Situation Remains Turbulent, Local Conflicts Escalate. In just one month, the Trump administration has taken a series of strong actions: deploying troops to arrest the Venezuelan president; continuously pressuring Europe and proposing to occupy Greenland; and significantly increasing naval and air force deployments to the Middle East, preparing for military intervention in the Iranian situation. The rapid concentration of these events is astonishing. In 2026, such geopolitical events will only increase, not decrease. The recent surge in precious metal prices is driven not only by expectations of AI computing power but, more importantly, by global turmoil. "Antiques in prosperous times, gold in chaotic times"—the more intense the conflict, the more favored traditional safe-haven assets become. Three years ago, when local wars broke out, cryptocurrencies were considered "digital gold" and experienced a general price increase. However, today, they have largely lost their safe-haven attributes and become higher-risk assets—highly correlated with US stocks, yet performing worse: "When US stocks rise, it doesn't necessarily follow; when US stocks fall, it inevitably falls." Every time geopolitical conflict escalates, BTC almost always "falls first." III. China's Domestic Attitude Towards Cryptocurrencies Continues to Tighten. Several landmark events have occurred in recent months: In late November 2025, the People's Bank of China, the Ministry of Public Security, and other departments jointly reiterated: all virtual currency trading and circulation, including stablecoins, are strictly prohibited. Central government agencies discussed whether individual cryptocurrency trading constitutes a crime: OTC deposits and withdrawals may be considered accomplices in disguised foreign exchange trading, but simply holding/trading cryptocurrencies generally does not constitute illegal business operations. The former director of the Central Bank's Digital Currency Research Institute is suspected of receiving ETH and cashing it out at a high point to purchase real estate; this case may trigger stricter regulatory measures. While some extreme voices claim that "OTC deposits and withdrawals may become criminal offenses in the future," this remains uncertain. More clearly, domestic policies will only become stricter, not looser. Historically, several instances of Chinese domestic regulatory intervention have directly triggered global market crashes: the 2017 ICO ban and the 2021 mining farm shutdowns both led to prolonged market downturns. In recent years, the crypto market has been more influenced by the US, and the marginal impact of Chinese domestic regulation has weakened. However, further tightening would directly result in a significant increase in the difficulty of new domestic funds entering the market. Fewer new participants mean a liquidity crunch. Even without a crash, a slow, gradual decline, like an old woman descending a staircase, is possible. Summary This is a reflection post I've been wanting to share for a while. In fact, since October, many people have clearly felt that making money is becoming increasingly difficult, while losing it is happening faster and faster. I also experienced a huge drawdown. We've watched US stocks soar and precious metals take off, while cryptocurrencies have remained sluggish, becoming tools for liquidity harvesting. Many politicians and developers treat the crypto market like an ATM, gradually draining the last vestiges of liquidity. Everything seems to be heading in a worse direction. I'm not optimistic about the secondary market in 2026, but I still firmly believe that crypto is the best sector of this era. The macroeconomic environment will be difficult, but opportunities still exist. You absolutely must dedicate more effort to becoming a better version of yourself and rediscover your own Alpha.