Analysts at JPMorgan Chase, led by Nikolaos Panigirtzoglou, have outlined a scenario where the cryptocurrency market could experience a meaningful recovery in the second half of 2026. However, this rebound is strictly conditional on the U.S. Congress passing long-awaited market-structure legislation by mid-year.
The bank's outlook arrives during a period of fragile sentiment. Bitcoin recently slipped below its estimated production cost of $77,000, a level historically viewed as a soft floor during downturns. This pullback has reinforced the cautious mood following a sharp correction in late 2025.
JPMorgan emphasizes a fundamental shift in market dynamics. The next potential uptrend is not expected to mirror prior retail-driven surges. Institutional investors now account for roughly 65% of large Bitcoin transactions, contributing to more disciplined market behavior. Thirty-day realized volatility has declined significantly year-over-year, reflecting steadier capital flows.
After record inflows of approximately $130 billion into digital asset products in 2025, the bank anticipates even larger allocations in 2026—but only if regulatory clarity improves. Such capital is projected to spill over into venture funding, mergers and acquisitions, and potential IPOs involving exchanges, payment platforms, and blockchain infrastructure firms.
The legislative trigger is centered on two key bills. In the House, the Digital Asset Market Clarity Act seeks to grant the Commodity Futures Trading Commission (CFTC) primary oversight of digital commodity spot markets, while preserving Securities and Exchange Commission (SEC) authority over investment contracts. In parallel, the Senate has advanced the Responsible Financial Innovation Act, which proposes a more hybrid regulatory model.
The most significant obstacle to a compromise is the treatment of stablecoin yields. The House-backed approach, aligned with the 2025 Guiding and Establishing National Innovation for U.S. Stablecoins Act, generally prohibits platforms from paying interest on stablecoin balances. The Senate's proposal is more flexible, allowing yield-bearing stablecoins under strict disclosure and reserve requirements. This "yield dispute" has become the central point of contention.
JPMorgan argues that a finalized regulatory rulebook would remove the longstanding overhang of "regulation by enforcement," unlock institutional mandates, and enable large asset managers to scale their crypto exposure without legal ambiguity. The formation of a formal conference committee to reconcile differences between the House and Senate in Q2 2026 will be a critical signal.
Beyond legislation, the bank notes potential technical stabilization signals, with Bitcoin trading below production cost historically coinciding with late-cycle capitulation phases. The thesis is clear: institutional capital is poised, volatility is moderating, and regulatory clarity could unlock the next major wave of inflows. If Congress fails to deliver, however, the recovery may be delayed regardless of other metrics.
