Bitcoin is steadily moving back from last year’s dramatic downturn, with a potential climb toward its $126,000 peak in 2026 now focusing on structural shifts rather than retail excitement. According to John D’Agostino, Coinbase’s head of institutional strategies, the recovery hinges on two major factors: the stabilization of professional market makers and the passage of the Digital Asset Market Clarity Act, also known as the CLARITY Act.
The October 2025 flash crash wiped out roughly $19 billion in long positions in a matter of hours after President Trump announced 100% tariffs on Chinese imports, sending Bitcoin down more than 14% and causing altcoins like Cosmos to briefly collapse on certain exchanges. D’Agostino attributed the sudden plunge to failures in crypto’s trading infrastructure. Unlike traditional equities, crypto market makers are not legally required to provide liquidity, and when fear spread, many exited, leaving retail investors vulnerable to sharp price swings.
Despite the extreme volatility, institutional interest remained strong. From October through December 2025, Coinbase observed some of the heaviest institutional buying windows on record. D’Agostino described the flash crash as a stress test rather than a market collapse. Unlike past events such as the FTX fallout, there were no major insolvencies, and large institutions managed their risk carefully.
The CLARITY Act is seen as a potential game-changer for Bitcoin and the broader crypto ecosystem. Supported by President Trump as part of a push to make the U.S. the “crypto capital of the world,” the bill aims to end regulation by enforcement by creating clear guidelines for digital assets. It designates the Commodity Futures Trading Commission as the primary regulator for digital commodities and provides explicit definitions for asset classifications and market participant rules. This clarity could reduce uncertainty, encourage institutional participation, and provide a stable foundation for long-term market growth.
For now, Bitcoin is trading in what D’Agostino describes as a “boring” sideways pattern, but this phase is seen as healthy consolidation. It allows institutional support to solidify and tests the market’s resilience after the October shock. If these structural and regulatory conditions hold, the path back to 2025 highs appears more plausible than ever, signaling a cautious but optimistic outlook for Bitcoin in 2026.
