Written by: Blockchain Knight
The first quarter of 2026 brings new expectations for Bitcoin. The core driver is not the launch of bank-issued stablecoins, but the accelerated opening of traditional wealth channels. With Vanguard and Bank of America successively easing restrictions on crypto investments, coupled with seasonal tailwinds, there is potential to hedge against the market volatility seen at the end of 2025.
Vanguard, managing $11 trillion in assets, lifted its ban on crypto investments in early December, opening up trading for spot ETFs like Bitcoin and Ethereum to its 50 million clients. Although it does not issue its own crypto products, its vast retail reach injects potential incremental demand into the market.
Starting January 5th, Bank of America will allow Merrill Lynch and private bank advisors to proactively recommend crypto ETPs, guiding suitable clients to allocate 1%-4% of their assets to mainstream US Bitcoin ETFs. This means hundreds of billions of dollars in wealth previously excluded will gain an entry path.
According to River statistics, among the 25 largest US banks, nearly 60% are currently at some stage of directly selling, custodying, or providing advisory services for Bitcoin.
The buyers in early 2026 are more likely to be retirement accounts adding a 2% Bitcoin position, rather than highly leveraged crypto funds.
Since 2013, Bitcoin's average return in February has been about 15%, with an average Q1 gain exceeding 50%. However, Q1 2025 recorded the worst performance in a decade (down 12%), proving that patterns are not absolute.
Current market expectations have been lowered. Standard Chartered has revised its 2026 Bitcoin target from $300,000 to $150,000. A rebound will rely more on actual capital inflows than momentum chasing.
Additionally, a proposed rule released on December 16th paves the way for state bank subsidiaries to issue "payment stablecoins," requiring 1:1 reserve backing and prohibiting arbitrary rehypothecation, among other things.
However, this rule is subject to a 60-day comment period and is unlikely to be implemented until late 2026 at the earliest, with scale forming in 2027, having no substantive impact on Q1.
Nevertheless, its long-term value is significant. Bank-issued compliant stablecoins could become settlement assets for ETF market makers, deepening liquidity in derivative markets and transforming public blockchains into institutionally trusted settlement layers.
Therefore, the Q1 market outlook becomes a mathematical formula: how many Vanguard clients will add a 1%-2% Bitcoin allocation, and how much capital inflow can the Bank of America channel bring?
