BlockByte Weekly: Recapping the Week & Our Predictions for 2026

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Weekly Snapshot

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• BTC: US $88,312 (-2.2%)
• ETH: US $2,977 (-4.5%)
• Crypto Market Cap: US $2.96T (-2.8%)
• Gold: US $4,338/oz (+0.9%)
• S&P 500: 6,834 (-0.8%)
• ASX 200: 8,621 (+0.3%)

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Executive Summary

• Crypto risk appetite was shaken early in the week as Broadcom fell roughly 10% and Oracle dropped 14% on weaker AI margin and cost guidance, dragging the Nasdaq down close to 2% and spilling into crypto markets.
• U.S. CPI printed at 2.7% year-on-year, the lowest since 2021, briefly lifting total crypto market capitalisation by 3.3% and pushing Ethereum up 5.8% before the move fully reversed as investors questioned data quality following the 43-day U.S. government shutdown.
• Adding to the volatile price action, institutional behaviour remained mixed. Strategy acquired 10,645 BTC for US $980 million, BitMine added 102,259 ETH worth ~US $320 million, while spot Bitcoin ETFs recorded US $497 million in net outflows, even as prices remained well below highs.
• Structurally, quantum risk became a recurring theme. Estimates suggest roughly 2.6 million BTC sit in quantum-vulnerable wallet formats, while Solana and Algorand advanced post-quantum upgrades.

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Key Stories this Week

Macro-Led Markets Set the Tone

Early in the week, crypto markets consolidated as risk-off sentiment spilled over from equities. U.S. tech stocks sold off sharply, led by AI bellwethers Broadcom and Oracle. Broadcom fell roughly 10% after flagging thinner AI margins, while Oracle dropped around 14% on weaker guidance and rising infrastructure costs. The Nasdaq slid close to 2%, one of its sharpest pullbacks since October.

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Diverging central bank policies added to uncertainty. Japan raised rates by 0.25%, while Australia’s RBA held rates at 3.6% with a hawkish tone. Meanwhile, the U.S. leaned more dovish ahead of key jobs and CPI data.

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AI-led equity sell-offs continue to correlate with risk-off behaviour in crypto assets. With calendar and tax-year end approaching, we expect profit-taking in high-performing equities to subside coming into the new year.

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Encouragingly, Bitcoin has delivered positive returns in January for the last 3 years. With more US rate cuts poised for 2026, we maintain a constructive view going into the new year.

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Our prediction: Bitcoin makes a new all-time high in the second half of 2026 as new Fed Chair Kevin Hassett is elected, slashing rates by 0.5%-0.75% and creating a renewed crypto bull market. Inflation picks up again, forcing the US to hike rates going into year-end.

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Institutions Position for 2026 Despite Weak Price Action

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Mid-week, institutional accumulation remained a standout theme. BitMine Immersion added 102,259 ETH, worth roughly US $320 million, building on a US $430 million Ether purchase disclosed the prior week, bringing total holdings to around 4 million ETH.

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Strategy also acquired 10,645 BTC for approximately US $980 million, following a US $962 million purchase the week before, taking total holdings to 671,268 BTC. Spot Bitcoin ETFs recorded US $497 million in net outflows.

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While 2025 has seen signifcant volatility and long-term holder selling, Strategy and BitMine have been major buyers. When corporates deploy nearly US $2.6 billion across two weeks while prices remain well below highs, it signals long-term conviction and growing comfort treating crypto as a strategic reserve asset.

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Our prediction: Strategy will be de-listed from the global MSCI index as it is more of a fund than an operating company. This will reduce the net inflows into their stock from index buying entities. This will limit their ability to raise more capital and buy more Bitcoin. The company has enough cash to make debt repayments, but will reduce the dividend on its preferred share and convertible note offerings from 10% to 5%.

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Quantum Risk and Labour Market Signals Emerge

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Later in the week, attention turned to longer-term risks and macro signals. Advances in quantum computing highlighted potential future vulnerabilities in Bitcoin and Ethereum, with estimates suggesting around 2.6 million BTC sit in older, quantum-vulnerable wallet formats, including roughly 1.1 million BTC linked to Satoshi-era addresses.

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From our perspective, quantum risk could become a 2026 pricing factor as institutions look further out the curve. Expect more capital and developer focus on quantum-resistant upgrades and custody solutions.

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Blockchains such as Solana and Algorand continued preparing for post-quantum security, with both exploring quantum-resistant signature upgrades.

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Our prediction: 2026 will not create any tangible quantum risks for Bitcoin as the logical qubits required to crack Bitcoin's encryption is still three orders of magnitude (~100x) away from being feasible. However, the debate will continue as the focus amongst the developer community. Post-quantum proposals for upgrades will be put forward and implemented at some point in 2027.

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CPI Surprise Triggers Rally, Then Reversal

The week closed with a sharp macro-driven move. November U.S. CPI came in at 2.7% year-on-year, its lowest level since 2021, pushing total crypto market capitalisation up as much as 3.3%, with Ethereum up over 5.8% at the highs.

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The rally quickly reversed as investors questioned data quality due to lower collection rates during the 43-day government shutdown and the impact of holiday promotions.

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Until we see a couple of months of clean economic data, free from shutdown and seasonal distortions, we expect continued volatility and limited conviction. With another potential U.S. government shutdown looming from January 30, avoiding leverage remains critical, as these environments tend to favour market makers.

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Our prediction: We don't get another US government shutdown in January as both sides come to a compromise on spending bills and cost reforms. CPI will rise from 2.7% to 4% by year end following rate cuts that spur the wealth effect across crypto and equities.

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Final Thoughts

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For BlockByte clients, current conditions remain firmly macro-driven. We continue to maintain core exposure to high-quality assets such as BTC and ETH, while avoiding over-extension into higher-beta (more volatile) trades.

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Looking toward 2026, we remain cautiously optimistic. The Fed has begun easing after nearly three years of balance-sheet tightening, with roughly US $40 billion per month in Treasury purchases injecting close to US $500 billion of liquidity annually.

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We wish you and your loved ones a very Merry Christmas and happy holiday.

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Until next week,

James

James Brannan
Managing Director
BlockByte