Has the 4 Winds of the Largest Crypto Cycle OAT Been Loosened or Tightened?
The institutional takeover is real. The tomfoolery hasn't stopped. Here's what actually matters for 2026—what happened in 2025-and how to not round-trip your gains. Smorgasbord!
FORWARD
Today is the Nativity of Our Lord, Christ is Born! Happy New Year and Happy Holidays to everyone!
I am excited and blessed to build more in 2026.
Back to our advertised schedule of 2 free letters and 1 paid letter each week. Want to make sure each letter is value packed and not just ai slop for you guys.
I thought it would be fitting, on the first letter, of the first week of 2026, to reflect on the current crypto/geopolitical landscape and explain how the time we find ourselves in is a bit different than anything before.
As someone who has been actively involved in this space since 2017, the amount of changes that I have already seen has been other wordly at times.
I joined right around the Bitconnect ponzi scheme, that was how I spent my first $btc…laugh it up. That’s around 2017.
Then ICO’s were the giant new thing. Essentially being able to buy into a project before it even hits the open market. For comparison, the only way to do this in the stock market, is to be labeled an “accredited investor” which states that you have to show over $200,000 investable liquid to be able to hold that status. Essentially gatekeeping the middle class from investing in projects like Uber or Facebook at pennies on the dollar.
Why does that matter? Literally every stock you buy is really after some rich guy bought in for pennies and dumped them to you because you can never buy earlier. When these ICO’s came out, it changed the game. And it changed the game without institutional backing so it was much crazier—but much more opportunity.
Then came DeFi and DEX’s which I personally loved because GDAX went away and I didnt want to keep signing up for KYC exchanges to then pay fees. Those projects all popped to hundreds of billions and still held their value over time. To me, this is how people will want to buy. If we can somehow build a peer-to-peer DeFi exchange, essentially merging ideas like Bisque and UniSwap for BTC purchases, we would see a giant shift in peoples’ DCA’s.
Then came the NFT boom which i didnt really grab onto. Another billion dollar market popping up all while the previously mentioned sectors blew up too. Seeing those cryptopunks have floors of $50k was just absurd. Watching Web3 come in was very interesting in this era because I think it opened the door to creating and signing accounts with cryptographic signatures as opposed to a name, id, login password etc.,
Then came the giant memecoin explosion of Shiba/Pepe or both kind of happened around the same time. Surprisingly, a lot of them have held value making it another billion dollar pop up. Obviously most of these are trash but this is the “sifting for gold” area of the market as I like to say. Basically all super high risk but a chance to find a lot of gold at the cheapest prices.
To now…the institutional phase. I remember crypto twitter in 2017 would constantly say “wait until institutional money arrives” and they were right, considering a single coin shot up $100,000 from that time (lol), but, the effect these corporate sinkholes have is at least damaging to the educational side of individuals and their autonomy in that they can just move a balance sheet over, shoot the price, and make every day citizens feel as though its unattainable to acquire a full one so they just shouldnt buy, that they should just invest in a fund that claims to hold it in bitcoin as opposed to taking control and owning it themselves—FRACTIONS ARE STILL BITCOIN! (Satoshis).
To me, it was an inevitable step to add institutional buying but it needs to be curbed with individuals partaking and learning how to manage their finances on their own. This is not the time to look for the next garbage coin or just check out and ride a mutual fund. DCA’ing bitcoin has been the best investment in all of human history over the last 10 years…its only existed since 2008.
I left out a ton and vaguely reference some, but you can see in just 9 years the space is almost transformed while the money stayed invested—and grew. .
You can tell that’s the short version but here is the real meat of the letter, again, Happy New Year and Happy Nativity Day!
TODAY’S LETTER — 2026!
Bitcoin opened 2026 trading around $93,000 after falling 27% from its October 2025 all-time high of $126,000. XRP is up 29% on the week. Spot ETF inflows just logged their first billion-dollar week since the late-2025 selloff ended. And somewhere, right now, someone is launching another meme coin on Pump.fun that will exist for approximately four hours..
The Case That This Cycle Is Different
The argument isn’t theoretical anymore. It’s structural.
The ETF effect is unprecedented. U.S. spot Bitcoin ETFs accumulated over $103 billion in assets under management by the end of 2025, with BlackRock’s IBIT alone holding $70 billion. These funds absorbed more than double the newly mined Bitcoin supply last year. That’s not retail FOMO—that’s systematic, rebalancing-driven capital that moves on quarterly schedules, not Twitter sentiment.
The supply dynamics have fundamentally shifted. Post-halving issuance dropped to roughly 450 BTC per day—about $40 million worth at current prices. Meanwhile, exchange reserves hit multi-year lows. Coins are moving into long-term wallets, ETFs, corporate treasuries, and now the U.S. Strategic Bitcoin Reserve. The tradeable float is shrinking while the buyer base is becoming more institutional.
The October 2025 peak didn’t behave like a classic blow-off top. Previous cycle tops featured 80%+ corrections. This one stopped at 30%. Volatility is compressing. The asset is behaving more like macro-correlated digital gold than speculative magic internet money.
Grayscale’s research team is calling 2026 “the dawn of the institutional era”—a transition from retail-driven boom-bust cycles to steadier, allocation-driven price action. Bitwise predicts ETFs will purchase more than 100% of new Bitcoin supply this year. Tom Lee at Fundstrat still sees a new all-time high by the end of January.
If they’re right, the traditional playbook of “sell 18 months after the halving” may no longer apply. Bitcoin could grind higher through 2026 without the apocalyptic correction that wiped out 2018 and 2022.
The Case That It Isn’t
But here’s what the bulls are glossing over.
The cycle hasn’t broken yet—it’s just stretched. From the 2022 lows at $16,500 to the October 2025 peak at $126,000, Bitcoin already completed what Elliott Wave analysts call a full five-wave rally. If that framework holds, the late-2025 drop could be wave A of a larger correction, with potential support zones at $84,000, $70,000, and $58,000 before any sustained new highs.
Macro is the wildcard. Bitcoin’s correlation with the Nasdaq 100 rose to 0.52 in 2025, up from 0.23 the prior year. It now moves with risk assets. If the Fed reverses course, if a credit event hits, if Treasury yields spike again—crypto will feel it indirectly not directly. The $19 billion in liquidations on a single day in late 2025 was a reminder that institutional involvement cuts both ways. When big money de-risks, the exit doors get crowded fast. This won’t always be the case but is for now.
Thin liquidity is structural. Spot market volumes remain at multi-year lows even as prices recover. That means sharp moves in both directions. A few billion in ETF outflows could crater prices just as quickly as inflows lifted them.
To me, it doesn’t matter because Bitcoin is really the only hard form of money that even exists, so I just DCA and monitor for opportunity.
Meanwhile, the Casino Never Closes
While institutions debate Bitcoin’s role as a macro hedge, the meme coin sector continues to be exactly what it’s always been: a high-velocity wealth transfer mechanism dressed up as entertainment.
The numbers from 2025 are staggering. Over 13 million meme coins were launched, with Pump.fun processing the vast majority. The sector peaked at $150 billion market cap in December 2024 before collapsing 65% to $53 billion. Most tokens launched, pumped, and died within hours. A small percentage created millionaires. A much larger percentage created bagholders.
Pump.fun itself raised $500 million in an ICO for its PUMP token—only to watch it drop 80% from highs. The platform now faces a class-action lawsuit alleging it created an “insider-rigged casino.”
But this is how everything that is new in this space plays out. Eventually, it survives the scrutiny and then becomes built into the ecosystem as an acceptable avenue to invest in. Almost every project that isnt Bitcoin is trash, but, if you are paying attention you can make short 2-3 year buy and holds to accumulate more BTC. Just have to remember the game isnt get more fiat at any cost….its BTC.
But here’s the uncomfortable truth: If Bitcoin rallies meaningfully in 2026, meme coins will pump harder. But only a select few. The wealth effect from rising BTC prices funds speculation elsewhere. If you’re going to play this game, do it with a hard allocation cap—money you’ve already written off—and an exit strategy that doesn’t require the market to stay irrationally longer than your patience.
What Actually Matters for 2026
Beyond the noise, here are the structural factors that will shape this year:
1. Regulatory implementation. The GENIUS Act (stablecoins) passed in July 2025. The CLARITY Act, which defines SEC vs. CFTC jurisdiction over digital assets, is expected to hit the Senate floor this month. Final implementing regulations should arrive by mid-2026. This isn’t bullish hype—it’s the plumbing that allows the next wave of capital to enter legally and comfortably.
2. The Strategic Bitcoin Reserve. The first U.S. government Bitcoin reserve was created in March 2025. Other major countries have already had reserves for a few years now. (glad to see this but it these things are inevitable, it isn’t like they want to do this. These things have to happen when central banks can’t ignore bitcoin, and fiat currency erodes. I wrote years ago in another letter that we were way too far behind to not have this when we auctioned off silkroad’s bitcoin instead of creating a reserve—should’ve been done in 2010), initially capitalized with ~200,000 BTC from seizures (worth approximately $18 billion). The government will not sell these holdings. The administration is exploring “budget-neutral” strategies for acquiring more. Whatever your politics, sovereign adoption of Bitcoin as a reserve asset is now U.S. policy.
3. Tax reporting changes. Starting this year, exchanges must report gross proceeds from crypto sales to the IRS using the new Form 1099-DA. The era of ambiguous reporting is ending. Plan accordingly. If you just buy and store offline, it wouldn’t apply until you try to sell. Supposedly, there are talks about trying to zero out any capital gains tax on crypto in the US. I think this is an absolute must-do.
There will be constant pushback from Feds on this but they can’t stop it so they might as well position ourselves as a global hub making it easy for people to use and save with. Doing that, will strengthen the dollar in as much is reasonably possibly for a central bank currency that all inevitably die with a giant scam, liquidation or war.
4. Global liquidity conditions. The Fed’s trajectory matters more than any halving cycle chart. Rate cuts support risk assets. Tightening crushes them. Watch the 10-year yield and M2 money supply more than you watch crypto Twitter.
The Exit Strategy You Should Have Already Written Down
If you’re in profit, congratulations. Now protect it. Or, even better, store it offline and never sell. The graveyard of crypto is filled with people who watched gains go from 10x to 2x because they didn’t have a plan.
DCA out, not just in. The same logic that made dollar-cost averaging a smart entry strategy works in reverse. Sell 5-10% of your position at predetermined price levels or time intervals. You’ll never catch the exact top. You don’t need to. You need to lock in real dollars while the market is willing to give them to you.
Example framework (if you MUST sell your Bitcoin):
Sell 20% when you hit 2x your cost basis
Sell another 20% at 3x
Let 40% ride with a trailing mental stop
Keep 20% as a “never sell” long-term position if you believe in the 10-year thesis
Consider time-based exits if you’re cycle-aware. If you believe the four-year halving rhythm still has any predictive power, we’re now 20 months post-halving. Historical peaks have occurred 12-18 months after halving events. We’re in the window. That doesn’t mean sell everything tomorrow—it means recognize that late-cycle conditions are fundamentally different from early-cycle conditions.
Rotate some gains into stability. Stablecoins let you lock in profits without leaving the ecosystem. Moving a portion of gains to USDC or USDT during parabolic moves isn’t bearish—it’s intelligent. You can redeploy during the next pullback.
Understand your tax exposure. Short-term gains (holdings under one year) are taxed at ordinary income rates—potentially 37% at the federal level. Long-term gains get preferential treatment. If you’re close to the one-year mark on a position, that’s worth considering. Use a tool like Koinly or CoinTracker to model your liability before you sell, not after. Again, we need to issue 0% Capital Gains Tax on Crypto as it is beyond criminal to tax gains at all in the first place, let alone 37%!
Write it down and automate where possible. The reason most people round-trip their gains is emotional: greed on the way up, panic on the way down. Set limit sell orders. Use exchange automation. Remove yourself from the decision in the moment.
2026 - Let it be another we trade meaningless currency for real money — while the opportunity exists.
God-Willing, see you at the next letter.
GRACE & PEACE