As Bitcoin Rallies, These 3 Factors Will Determine Crypto’s Comeback

It’s been a tough year for crypto. Whether these conditions change — and prices end 2026 on an upswing — will depend on investor interest, the Fed and mainstream acceptance.

***Money is not a client of any investment adviser featured on this page. The information provided on this page is for educational purposes only and is not intended as investment advice. Money does not offer advisory services.***

Crypto investors are finally getting some welcome news: Bitcoin has surged above $70,000 for the first time in more than two months — a sharp rebound after spending much of the summer stuck in the $60,000 range.

Now, bitcoin is inching towards $80,000. But even after this rally, it remains roughly 10% below where it started 2026. The roughly $125,000 record it reached last fall is a distant memory. And it’s been an even tougher year for other popular cryptocurrencies, like ether and cardano.

---

Must Read

• 10 Smart Ways Seniors Are Earning Extra Money
• Your Social Security Number Isn’t 'Suspended' — That Phone Call Is Probably a Scam
• Silver Is Up 70% Since This Time Last Year — and These Gold IRA Companies are Handing Out Up to $25,000 of It

---

The slump might seem surprising. After all, crypto is easier than ever to buy, and regulators have become friendlier to the industry. Major financial companies are offering a growing number of ways for people to use and invest in digital assets.

So why haven’t prices followed? Vanessa Grellet, managing partner at crypto venture firm Arche Capital, says last fall’s selloff did lasting damage.

“Every time [borrowed money] comes out of the crypto markets, there’s a huge crunch,” she says. Combined with concern over tariffs and interest rates staying higher for longer, that has made it especially difficult for crypto to recover.

Whether these conditions change — and the price of crypto ends the year on an upswing — will depend on how it squares up to several challenges in the coming months.

1. Can crypto win back investors?

Crypto needs buyers, and for much of this year, demand has been lacking.

On Robinhood, for example, crypto trades through the app totaled $18 billion during the second quarter, down 35% from the same period last year. That wasn’t because Robinhood users stopped trading: Stock trading volume on the platform jumped 85% from a year earlier, while options activity increased 50%.

Activity elsewhere in the market has been unusually dull, too. Luke Deans, a senior research associate at crypto asset manager Bitwise, told CoinDesk earlier this month that traders were becoming accustomed to bitcoin’s quiet trading cycle to the point that they expect “very little will happen.”

Professional investors haven’t exactly been piling in, either. U.S. spot bitcoin ETFs (exchange-traded funds) recorded $4.9 billion in net withdrawals during the second quarter, according to the New York Digital Investment Group. Those funds have become one of the most important avenues for new money to enter the market since their debut in 2024.

Crypto also faces more competition, with artificial intelligence gradually replacing digital currencies as the buzziest speculative asset.

Grellet says that shift has been significant. “All the attention got crowded out to AI” earlier this year, she adds, explaining that “we see talent and money moving out of crypto and into AI because of the proximity between the two.”

Basically, traders as well as developers seem to think crypto feels boring and have adjusted accordingly. But this week’s rally shows how quickly that sentiment can change. The bigger test will be whether investors keep buying after the initial excitement fades.

For ordinary investors, one indicator to watch is money flowing into bitcoin ETFs. Sustained investment into these funds would suggest traditional investors are becoming more willing to take a chance on crypto again, while continued withdrawals could signal that enthusiasm remains low.

---

Must Read

• Retirees Are Doing These 10 Things to Add to Their Monthly Income
• Your Social Security Number Isn’t 'Suspended' — That Phone Call Is Probably a Scam
• Warren Buffett on Market Volatility — and 3 Ways You Can Take Advantage

---

2. Will the Fed hike interest rates?

Although the Federal Reserve held its benchmark interest rate at 3.5% to 3.75% in July, three officials voted to raise rates by another quarter percentage point.

This matters because when interest rates are high, investors can earn meaningful returns from traditionally safer investments such as Treasury securities and savings products. That can make taking a chance on an asset such as bitcoin less attractive. Lower rates can have the opposite effect by encouraging investors to seek higher returns elsewhere.

Bitcoin’s recent rally offers an example of how sensitive crypto remains to those conditions. The cryptocurrency’s value jumped after the Treasury Department increased purchases of long-term government bonds, pushing yields lower. Optimism about crypto legislation may also have contributed to the move.

That doesn’t mean lower rates guarantee higher bitcoin prices. Chris Kuiper, vice president of research at Fidelity Digital Assets, noted in an August report that bitcoin hasn’t been responding to increases in global liquidity the way it historically has.

Nonetheless, Fed policy, inflation and bond yields will remain important clues about how willing investors may be to take risks through the end of the year.

3. Can mainstream finance embrace it?

Despite crypto’s difficult year so far, the industry itself remains firm. For one, stablecoins — digital tokens generally designed to remain worth $1 — still represent a market of roughly $300 billion. Tether alone accounts for more than $180 billion.

The appeal of stablecoins might be difficult to understand for many Americans. Bank accounts, credit cards and payment apps already make dollars easy to store and move.

But for Austin Campbell, founder of advisory firm Zero Knowledge Consulting, the picture looks different elsewhere in the world. He says Americans tend to take plentiful access to dollars and a functioning financial system for granted, but “if you live in Turkey or Nigeria or Venezuela, suddenly being able to have that is life-changing.”

Traditional financial companies are also continuing to move deeper into digital assets.

In April, Franklin Templeton announced plans to acquire crypto investment firm 250 Digital. Chris Perkins, one of the firm’s executives, told The Wall Street Journal that institutional attitudes have shifted substantially. Whereas firms once worried about the reputational risk of entering crypto, he said, institutions now face “reputational risk for not being in the space.”

But 2026 has also demonstrated an important distinction: A growing crypto industry does not automatically mean rising crypto prices.

Grellet says that disconnect between stronger institutional support and sluggish prices may just be a timing issue. Major banks and brokerages like Bank of America, JPMorgan and Charles Schwab have announced more crypto products, but many are still building the systems and infrastructure needed to offer them to a wider audience.

“It’s just a delayed reaction of the markets,” she says. “Traditional finance takes time and needs to do things right.”