Banking Giant Predicts Regulatory Framework Will Spark Next Bull Cycle

In a significant institutional outlook, Citigroup analysts project that Bitcoin (BTC-USD) and Ethereum (ETH-USD) are poised for a substantial comeback by 2026. The forecast hinges on the anticipated maturation and formalization of global cryptocurrency regulations, which the bank believes will reduce market uncertainty and attract broader institutional capital.

The Regulatory Catalyst

Citi's analysis suggests that the current period of regulatory development, while creating short-term volatility, is laying the groundwork for long-term stability. The establishment of clearer rules around custody, trading, and compliance is expected to mitigate one of the largest barriers to entry for traditional finance giants.

  • Institutional On-Ramp: Clearer regulations are seen as building the necessary infrastructure for large-scale institutional adoption.
  • Market Legitimization: A defined regulatory environment lends legitimacy, potentially moving crypto further into the mainstream financial portfolio.
  • Reduced Volatility: With established rules, the extreme price swings characteristic of the crypto market may moderate, appealing to a more risk-averse investor base.

Timeline and Implications

The 2026 timeline allows for the implementation of key regulatory frameworks currently under discussion in major economies like the United States and the European Union. Citi's projection implies that the next major bull cycle for digital assets will be fundamentally different from previous ones, driven less by retail speculation and more by structural, policy-led growth.