VanEck 2026 Outlook: This Round of BTC Downside Potential Limited, 2026 Likely to Be a Year of Consolidation

On January 3, Matthew Sigel, VanEck’s Director of Digital Assets, outlined key takeaways in the firm’s 2026 Digital Assets Outlook, noting digital assets are sending a complex yet positive signal to start the year. Bitcoin’s prior cycle saw an ~80% peak-to-trough drop, but realized volatility has since fallen by nearly half—suggesting this cycle’s decline may shrink to around 40%. The market has already absorbed roughly 35% of that projected drop, per Sigel. Bitcoin’s historic four-year cycle (often peaking in the window after U.S. elections) remains intact following its early October 2025 high. This pattern points to 2026 being a year of consolidation, not sharp gains or a crash. Global liquidity in 2026 is mixed: rate-cut expectations offer support, but U.S. liquidity has tightened slightly as AI-driven capital expenditure booms collide with a fragile funding market, widening credit spreads. Crypto ecosystem leverage has been reset after multiple washouts, while on-chain activity—though still weak—is showing early signs of improvement. Sigel’s recommendations for investors: - A disciplined 1% to 3% Bitcoin allocation via dollar-cost averaging (DCA) - Increasing holdings during leverage liquidations - Reducing positions when markets overheat with speculative activity