Bitcoin’s latest sell-off has sharpened debate over the path into 2026, with 10x Research’s Markus Thielen warning of a potential 60% drawdown tied to the U.S. midterm election cycle even as other analysts frame the decline as a mid-cycle correction that could set up a recovery.
10x Research flags election-cycle risk and deep downside scenario
Markus Thielen, head of digital asset research at 10x Research, said Bitcoin could face a drawdown of up to 60% aligned with dynamics around the 2026 U.S. midterm elections. The call comes as risk sentiment weakened amid concerns about a broader sell-off in U.S. assets.
10x Research highlights Bitcoin’s history of sharp retracements: since 2010, the asset has logged more than 50 drawdowns of at least 10%, with an average peak‑to‑trough decline near 30%. That compares with a recent drop of roughly 32% from the latest highs, placing the current move in line with typical historical corrections.
Some market signals suggest selling pressure may already be well-hedged. 10x Research notes elevated options skew above 4—a measure of demand for puts versus calls—indicating investors have extensively hedged downside, a setup that has sometimes preceded local bottoms rather than prolonged capitulation.
Macro and policy backdrop: rates, regulation, and the 2026 timeline
Analysts cite the potential for Federal Reserve rate cuts and bipartisan crypto legislation to support digital assets heading into 2026, even if valuations lag improving fundamentals in the near term. The post-ETF environment—after the launch of U.S. spot Bitcoin ETFs—adds a demand channel that differentiates the current cycle from the 2022 bear market’s 73.3% drawdown.
Market structure bills and broader digital asset policy remain in focus ahead of the 2026 midterms. Some research houses argue policy clarity could be a key driver for renewed inflows, while others caution that election-year uncertainty can amplify volatility.
Diverging forecasts: mid-cycle correction or deeper reset?
- Grayscale Research said the current drawdown points to a local bottom and could invalidate the popular four-year cycle framework, projecting a recovery path into 2026.
- Glassnode described the decline as consistent with historical mid-cycle behavior rather than a full trend reversal.
- K33 Research argued the market is overreacting to distant risks, adding that the case for near-term upside is more plausible than a repeat of an 80% drawdown.
- Scenario ranges: cautious views see Bitcoin potentially slipping to $70,000–$75,000 if key support fails, with a stress-test low near $55,000–$57,000 in a severe macro downturn.
- Consensus clusters: Forecasts compiled by CryptoRank span $60,000 to nearly $500,000, with many clustered between $120,000 and $170,000 into the next upcycle.
Several institutional outlooks also envision a range-bound market near $90,000 into year-end, followed by a potential 2026 advance toward ~$135,000, contingent on the pace and extent of Fed easing and the progress of U.S. crypto legislation.
Historical context
Across the past decade-plus, Bitcoin has repeatedly cycled through double-digit pullbacks—in excess of 50 such episodes since 2010—with an average decline around 30%. While this cycle has featured a significant correction, analysts note structural differences from prior bear markets, including greater regulatory clarity and ETF-driven demand, which could influence the trajectory into 2026.
Bottom line: Views diverge on depth and timing—ranging from a potential midterm-linked reset to a mid-cycle consolidation—but most institutional research emphasizes that macro policy and U.S. regulatory outcomes will likely define Bitcoin’s next major leg.