One year after its price record: what is preventing Bitcoin from returning to $126,000?
On October 6, 2025, Bitcoin's price surpassed $126,000 for the first time, while the market capitalization of the world's largest cryptocurrency reached a record $2.5 trillion. However, Bitcoin failed to maintain these levels.
Just four days later, during the night of October 10–11, the cryptocurrency market experienced one of the largest crashes in its history. Within just 24 hours, exchanges liquidated more than $19 billion worth of traders' leveraged* positions, significantly reducing market liquidity.
* Leverage is a trading mechanism that allows traders to open positions larger than their own capital by using borrowed funds. For example, with 10× leverage, a trader can open a $10,000 position with just $1,000 of their own funds.
The immediate trigger for the crash was Donald Trump's announcement of additional 100% tariffs on Chinese goods. The news sparked a massive sell-off in risk assets, including cryptocurrencies. According to the European Securities and Markets Authority (ESMA), approximately 1.6 million market participants were affected by the liquidations.
Within hours, Bitcoin lost more than 14% of its value, while some altcoins plunged by as much as 70–90% at their lowest points.
BTC continued trading near $100,000 until the end of 2025, but a deep correction began in 2026. As a result, the cryptocurrency lost more than 50% of its value compared with its October peak. The lowest point of the current market cycle was recorded on July 1, when the price fell below $58,000.
The situation began to change in August 2026. Bitcoin entered a strong recovery phase, gaining more than 40% from its July low. Currently, Bitcoin's price is around $86,000, with its market capitalization estimated at $1.72 trillion. This means the cryptocurrency remains approximately 32% below its all-time high.
US national debt: what is driving Bitcoin higher?
The year 2026 has been a turbulent one for Bitcoin. Throughout the first half of the year, the cryptocurrency remained in a downtrend. A turning point came in the second half of August, when the market reversed course and began moving upward.
One of the main drivers of the recovery was the US Treasury Department's decision to increase its buybacks of older, long-term Treasury securities*.
* Treasury securities are debt instruments issued by the US Department of the Treasury to finance government spending. By purchasing them, investors lend money to the government and receive interest payments and repayment of principal at maturity, according to the terms of the issue. US Treasury securities are divided into three main categories by maturity: Treasury Bills — from 4 to 52 weeks, Treasury Notes — from 2 to 10 years, and Treasury Bonds — with maturities of 20 and 30 years.
These securities have relatively low liquidity, making it difficult for large investors to sell substantial holdings without significantly affecting market prices. The buyback program made it easier to exit such positions and encouraged capital to flow into other assets, including stocks and cryptocurrencies.
The cryptocurrency market also received additional support from investors' perception of these measures as a form of indirect quantitative easing*.
* Quantitative easing (QE) is a monetary policy tool through which a central bank purchases government bonds and other financial assets, increasing bank reserves and seeking to lower long-term interest rates. This can improve financial conditions and stimulate investment, including investment in cryptocurrencies.
Another significant factor is growing investor distrust of US government debt and traditional currencies.
Despite the US Treasury's attempts to contain rising Treasury yields, the effectiveness of these measures remains limited. Yields on 20-year and 30-year Treasury bonds exceeded 5.7%, reaching their highest levels in 24 years.
Investors are concerned about the pace of national debt growth, rising defense spending and debt-servicing costs, as well as the persistent federal budget deficit. Historically, the combination of high inflation and declining confidence in government debt instruments and fiat currencies has created favorable conditions for the cryptocurrency market.
By October 2026, US national debt had already exceeded $40 trillion, while annual interest payments were approaching $1 trillion. Rising debt-servicing costs are intensifying investor concerns about the long-term sustainability of government finances. Against this backdrop, Bitcoin is once again attracting attention as an asset whose issuance is independent of central bank and government decisions.
Since the second half of August 2026, these trends have been accompanied by increasing inflows into spot cryptocurrency ETFs* and rising open interest* in cryptocurrency futures on traditional exchanges, including CME (Chicago Mercantile Exchange).
* An ETF (Exchange-Traded Fund) is an investment fund whose shares trade on a stock exchange, allowing investors to gain exposure to the performance of specific assets without having to purchase and hold those assets directly.
* Open Interest (OI) is the total number of outstanding futures and options contracts that have not yet been closed, exercised, or settled. Unlike trading volume, which measures the number of transactions over a given period, open interest reflects the number of contracts that remain active. Rising open interest indicates increasing market participation but does not, by itself, signal the direction of future price movements.
At the same time, the amount of Bitcoin held on cryptocurrency exchanges is declining, while major mining companies are reducing their sales. Together, these factors are creating a relative shortage of available BTC supply and supporting upward price momentum.
However, the broader macroeconomic environment remains uncertain. The US Federal Reserve continues to maintain a hawkish stance and is considering further interest rate increases.
Under these conditions, Bitcoin is unlikely to return to $126,000 before the end of 2026.
Following its rapid recovery, the market is more likely to enter a period of sideways trading and gradual accumulation.
The four-year cycle: is Bitcoin approaching a turning point?
From a historical perspective, the past year has largely followed Bitcoin's familiar market pattern. This pattern is based on four-year market cycles associated with halving* events.
* Halving is a mechanism built into the Bitcoin protocol that reduces miners' block rewards by half every 210,000 blocks, or approximately once every four years. The mechanism gradually reduces the rate at which new BTC enters circulation and ensures compliance with Bitcoin's maximum supply limit of approximately 21 million coins. Following the April 2024 halving, the block reward fell from 6.25 BTC to 3.125 BTC.
Following the latest halving, Bitcoin's daily issuance declined from approximately 900 BTC to 450 BTC. As a result, around 164,000 new coins now enter circulation annually.
In March 2026, the number of mined bitcoins surpassed 20 million, representing 95% of the maximum possible supply. Mining the remaining one million coins will take more than a century, with Bitcoin's issuance expected to be completed around 2140.
In the three previous cycles, Bitcoin reached its peak price 364, 526, and 548 days after the halving, respectively.
The latest all-time high of approximately $126,000 was reached around 534 days after the April 2024 halving.
In previous cycles, reaching a peak was typically followed by a prolonged correction. The periods between the price peak and the subsequent market bottom lasted 412, 363, and 377 days, respectively.
Exactly one year has passed since the October record. Based on historical patterns, the market is now entering a period when previous cycles saw the main phase of the decline come to an end and a gradual recovery begin. However, the scale of the current correction differs significantly from previous cycles.
In earlier cycles, Bitcoin fell by 76–84% from its peak to its bottom. In the current cycle, the maximum drawdown has so far been approximately 54%, when BTC was trading in the 58,000–59,000 range.
The decreasing severity of Bitcoin's price declines reflects the gradual maturation of the cryptocurrency market. Bitcoin's market capitalization has grown considerably, while institutional investors and exchange-traded funds have become increasingly important participants in the crypto industry. As a result, cryptocurrency price fluctuations are gradually becoming less extreme.
Nevertheless, expectations of an immediate return to record levels may be premature. In previous cycles, recoveries were preceded by extended periods of market bottom formation.
Therefore, the $126,000 level should be viewed not as a price target for a particular month, but as the next strategically important milestone. A sustained breakout above the previous all-time high would also send a stronger signal to the market than merely returning to that level.
Trump, Iran, and AI: three obstacles to Bitcoin's growth
The year following Bitcoin's all-time high has been a period of reassessing expectations for the cryptocurrency market.
Investors had anticipated faster progress on political promises aimed at supporting digital assets, but underestimated the impact of inflation, high interest rates, and geopolitical risks.
The policies of US President Donald Trump have had a mixed impact on the cryptocurrency industry.
On the one hand, his declared support for digital assets helped strengthen confidence in the sector. On the other hand, the introduction of trade tariffs increased inflationary risks, complicating the outlook for monetary policy easing.
Another disappointment was the delay in advancing the CLARITY Act through the US Senate. The legislation is intended to establish a clearer regulatory framework for the US cryptocurrency market and define the responsibilities of different regulatory authorities.
The creation of a US Strategic Bitcoin Reserve is another important development.
The original plan was to establish the reserve using confiscated cryptocurrencies. The very existence of such a reserve could strengthen Bitcoin's position as a global asset. However, additional direct demand would arise if the government began purchasing new coins.
Among corporate buyers, Michael Saylor's Strategy continues to play a prominent role, steadily increasing its Bitcoin holdings.
However, the company's purchasing capacity depends on access to financing. Moreover, purchases by a single major participant cannot indefinitely compensate for insufficient demand from the broader market.
Another obstacle to Bitcoin's recovery is the conflict involving Iran.
Rising energy prices and disruptions to international logistics are adding to inflationary pressure. In early October 2026, Brent crude oil prices exceeded $100 per barrel amid concerns about supply disruptions from the Middle East. For the cryptocurrency market, this creates a dual risk: higher energy prices fuel inflation, while rising electricity costs simultaneously increase Bitcoin miners' operating expenses.
The artificial intelligence sector is also creating additional competition for investment capital.
Large-scale investments in AI infrastructure development are attracting substantial financial resources while generating additional short-term cost pressures.
To return to its all-time high, Bitcoin needs to gain almost 50% from its current price.
Further progress on the CLARITY Act, increased corporate Bitcoin purchases, and government acquisitions of new coins for the US Strategic Bitcoin Reserve could accelerate the recovery.
A new record in 2027: what would it take?
Bitcoin could return to its all-time high of $126,000 in 2027, although such an outcome is far from guaranteed. Several conditions could support further price growth:
- Easing of US Federal Reserve monetary policy and an improvement in global liquidity conditions.
- Lower inflationary pressure and reduced geopolitical tensions, including in the Middle East.
- Increased institutional capital inflows through spot ETFs and other investment vehicles.
- Continued corporate Bitcoin purchases and potential government acquisitions for the US cryptocurrency reserve.
- Progress on the CLARITY Act and the establishment of clearer regulations for the US cryptocurrency market.
- Continued constraints on Bitcoin supply available on exchanges and reduced selling pressure.
Otherwise, the consolidation period could extend further. To confirm the beginning of a new bullish phase, the market would need not only to reach $126,000 but also to establish a sustained position above that level.