Bitcoin in 2026: ETFs, Governments, and the Next Cycle

It’s a new year, and Bitcoiners around the world are eager to see what the world’s first cryptocurrency will achieve. Last year was an exciting adventure that saw Bitcoin (BTC +1.32%) hit a new ATH of $126,198 before correcting 6%, closing the year out at $88,725.

While this value is slightly lower than the $93,460 Bitcoin ended with a year prior, it doesn’t represent a decline in Bitcoin activities but rather a post-bull market reset. Additionally, delays in Bitcoin’s 4-year cycle have led some to consider this old strategy obsolete. As such, investors continue to seek out clarity in the changing market. Here’s what you can expect from Bitcoin in 2026.

Bitcoin’s Layer-1 Stability in 2026

Bitcoin Core has not stated that they will make any major upgrades to the mainnet, nor have they released a detailed protocol map. This lack of information falls in line with speculation that there will be no major consensus changes to Bitcoin following last year’s Bitcoin Core v30 OP_RETURN expansion.

Source – Bitcoin Core

Bitcoin Improvement Proposals to Watch

While there are no set-in-stone upgrades planned, there are many that await approval. These upgrades are still in debate, with both sides sharing the pros and cons of each. Specifically, the planned upgrades provide more functionality to the network. However, opponents argue that they decrease network simplicity, which has always been a core aspect of Bitcoin.

BIP-360

The BIP-360 upgrade is meant to quantum-proof Bitcoin. The protocol would integrate Lamport keys and hash-based signatures like XMSS or SPHINCS+. This maneuver would also add another layer of protection to wallets and reduce future vulnerabilities to quantum hacking attempts.

If passed, the upgrade would require a soft fork with miners manually having to upgrade their UTXOs. This process would require the miners to conduct a spend-and-recreate to complete. If consensus can be achieved on this upgrade, developers envision a slow 5-10 year transition for the network.

BIP-347

The BIP-347 upgrade is another game-changer in the works that has yet to secure full consensus from the community. This upgrade would improve Bitcoin functionality by enabling vaults and ZK proofs on the network. Zero-knowledge proofs improve privacy and security by ensuring no identifying data needs to be shared during transactions.

The upgrade would also improve L2 support by enabling trustless bridges. This enhancement would support further Lightning Integration and reduce fees. Proponents argue that the upgrade is long needed to stay competitive, while opponents state that it complicates the network far beyond acceptable terms.

BIP-119

The BIP-119 upgrade would add smart contract primitives to the Bitcoin ecosystem. Bitcoiners have had to rely on the L2 solution in the past to accomplish this task. However, this potential upgrade could streamline that process alongside additional support for L2s via additions to the Taproot upgrade.

Focus on L2 Scaling

Interestingly, the majority of proposed Bitcoin upgrades focus more on L2 support rather than changing the mainnet. The Lightning Network has proven to be a viable resource for Bitcoiners seeking to lower fees, increase transaction speeds, and add new features. This year could see the network secure several new functions, including support for ZK rollups and more.

More Integration

This year will also see a lot more Bitcoin integration. From payment processors to gaming developers, Bitcoin will find new use case scenarios. Creative minds remain hard at work, figuring out different methods of creating access to digital assets, with 2026 expected to be a big one for the crypto community.

P2E

While Bitcoin can’t support gaming alone, it can be a valuable asset to developers using L2 solutions like Stacks and the Lightning Network. Bitcoin-powered games remain limited. However, gamified developer platforms like Bitcoin Bounty Hunters continue to demonstrate the added value obtained when integrating these assets.

DeFi Support

Traditionally, Bitcoin needs to be wrapped to participate in DeFi features like staking. Recently, there has been a push in BTCFi platforms that enable Bitcoiners to secure yield using liquid staking options.

To accomplish this task, networks utilize trustless bridges to access Proof-of-Stake ecosystems with wrapped Bitcoin. Consequently, you could see more PoS networks enticing Bitcoiners to join.

Wall Street Integration

The DeFi market isn’t the only one preparing for a grandiose entry. Wall Street has long had its eye on Bitcoin. However, a lack of regulatory clarity hindered integration in the past. Thankfully, this situation changed this year as governments appear to have taken a pro-crypto stance.

The legitimization of Bitcoin by the market has fueled institutional demand. Large investment firms like BlackRock (BLK +1.46%) continue to seek out Bitcoin-related assets to fulfill demand from their clients. This market momentum has driven Bitcoin liquidity and ecosystem developments designed to accommodate institutional investors.

ETF Inflows

The approval of several Bitcoin ETFs has been another reason why institutional investors have been drawn to cryptocurrencies in droves. Since their approval, Bitcoin ETFs have grown to include $137B in assets, or 7% of the total supply.

This last year was a big one for Bitcoin ETFs, with some reports showing that Bitcoin ETFS secured $50B in net inflows, surpassing gold ETFs’ performance during their early days. Additionally, the introduction of Bitcoin financial tools has enabled companies like Bank of America (BAC +1.58%), Wells Fargo (WFC +2.17%), and Vanguard (VTI +0.38%) to add Bitcoin-related assets to their retirement and 401K offerings.

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Government Support

Another potential development to expect in 2026 is continued government support for Bitcoin and digital assets. Already, the US and other leading economies have made the pivot towards a pro-crypto stance. In the US specifically, there has been significant regulatory progress made over the last year.

Currently, there are several pieces of legislation under implementation or debate that could help to drive crypto adoption and secure more investment capital into the Bitcoin ecosystem. The GENIUS Act, passed last July, and the CLARITY Act will provide a viable regulatory framework for stablecoins and other digital asset issuers.

This regulation falls in line with this administration’s goal to make the US the leading blockchain economy. Additionally, the SEC and other committees like the CFTC have recently added more crypto-friendly members.

US Bitcoin Reserves

Keenly, President Trump signed an executive order on March 6, 2025, that authorizes the US to start a Bitcoin reserve fund. This maneuver set the standard for acquiring Bitcoin and storing the reserves. Notably, the US currently has 207,000 Bitcoins in its reserves. Under the new order, these confiscations are held in a “digital Fort Knox.”

The plan also calls for the acquisition of 1M Bitcoin in total while providing transparency for state-level reserves. This maneuver led Arizona, New Hampshire, and Texas to announce plans to host Bitcoin reserves. Notably, analysts predict that many more states will follow suit in the coming months.

International Bitcoin Reserves

It would be unwise to think that the US is the only nation pursuing Bitcoin reserves. According to reports, there are currently 16 nations that have plans to launch Bitcoin reserves in 2026. Additionally, there are 27 nations that currently have some form of Bitcoin exposure.

Notably, both of these numbers are set to increase in 2026, driving demand and values up. Here’s a look at some other nations’ 2026 Bitcoin strategies that could alter the market’s trajectory moving forward.

Bhutan

Bhutan continues to expand its mining operations. The country has quietly become the 3rd largest sovereign Bitcoin holder, amassing over 13,000 Bitcoin via its state-sponsored mining operations. Interestingly, the State-owned Druk Holding & Investments (DHI) heads the nation’s mining facilities, which can mine for very little cost using the nation’s hydro power plants.

Currently, Bhutan supports mining operations, but only for select firms and in allotted locations. Specifically, the nation permits mining in the Gelephu Mindfulness City sandbox, and only after completing KYC/AML requirements. Notably, Bhutan has seen major success with this strategy, with the nation surpassing a third of its GDP via mining. As such, it plans to expand its operations in 2026.

United Kingdom

Much like the US, the UK has focused its efforts on stablecoins recently. The country has passed pro-crypto legislation that is set to kick in late 2026 following FCA authorisation. Notably, ETFs remain banned in the UK, but institutional demand is high, leading analysts to predict that the nation will follow the US’s example and approve these assets in 2026.

Notably, the UK has significant Bitcoin exposure. The country currently has 61,000 Bitcoins that it acquired from several confiscations. Despite it being one of the largest sovereign holders, regulators have not announced any plans to launch Bitcoin reserves.

El Salvador

When you look towards Latin America, you can see similar trends with nations like El Salvador actually leading the charge. El Salvador was the first country to recognize bitcoin as legal tender. The nation has since invested heavily in mining, acquisition, and international projects.

This year will be an interesting one for El Salvador as the nation recently signed a multi-billion-dollar loan package from the IMF. As part of the IMF’s stipulations, the nation is supposed to halt further Bitcoin integration and remove its recognition as legal tender.

While the nation’s president, Nayib Bukele, agreed to the terms, many analysts have noted that the nation has continued acquiring Bitcoin and adding to its reserves. The country added 1000 Bitcoin in just the last 2 months of 2025.

Additionally, the president continues to go online and share plans to acquire 1 Bitcoin daily moving forward. These discrepancies have caused some blowback from the IMF, which is set to review the nation’s loan commitments in the coming months to decide if they should continue with the program or not.

Despite the backlash, El Salvador has lit a fire in the Latin American Bitcoin community. The country has secured +400M in unrealized profits since the launch of the program. This growth has led other nations like Argentina to begin pivoting towards bitcoin. Specifically, the nation has launched government-backed mining operations as part of its 2026 strategy.

More Countries Launch Mining Operations

You may be surprised to learn that 14 countries already have government-sponsored Bitcoin mining operations underway. Nations like the UAE, Japan, Paraguay, Laos, Ethiopia, Oman, Russia, China, and Iran continue to invest in mining operations and build up reserves.

Bitcoin Still Has Lots of Investing Potential

Most analysts predict more gains for Bitcoin in the coming months. The combination of ETF inflows, which could account for 100% of new supply, alongside new L2 functionality, payment processor support, and user demand, should culminate in new all-time highs this year.

According to several analysts, Bitcoin could hit $250K by the end of 2026. Specifically, Charles Hoskinson, who is the founder of Cardano, and analyst Jesse Eckel predict this level of growth. Even Bitcoin Suisse forecasts $180,000, citing scaling enhancements and more federal support as driving factors.

Technical indicators also suggest more growth for the network. Bitcoin currently has a bullish RSI at 70.4 and a positive MACD. These technical indicators have led some to believe that Bitcoin’s 4-year cycle is still in effect, just slightly delayed. These investors expect to see more growth as another halving approaches.

Less Volatility

Last year was a turbulent one for Bitcoin, with the asset seeing a lot of volatility as everything from regulations to exchange hacks caused the price to fluctuate. In 2026, there will still be some volatility, but nothing like the years prior.

The inflow of institutional investors will help to stabilize volatility moving forward. Unlike traditional Bitcoin investors, institutional investors don’t have shaky hands. As such, they will help to stabilize the network, buying the dip as part of their larger accumulation strategy.

It’s a New Year, and Bitcoin is Ready to Shine

When you examine the current state of the Bitcoin economy, it’s easy to see that the network continues to mature. Consequently, you can expect to see a combination of government and institutional support take the world’s first crypto to new levels in 2026.

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