The global cryptocurrency market, which started the new year under $90,000, marked a closing below the level witnessed at the beginning of 2025. Last year presented numerous challenges as significant developments kept suppressing prices, preventing any celebratory highs for BTC all-time high peaks. Although this year hasn’t kicked off like 2022, Henrik predicts an impending market crash.
2026: The Sole Crypto Surge
Henrik likens the forthcoming crypto surge to a sugar coma: a brief yet sharp ascent signaling a subsequent steep decline. Wall Street titans are deeply optimistic about 2026, foreseeing continued growth in tech-focused stocks. The anticipation is that ongoing interest rate cuts and monetary expansion in risk-prone markets will lead to an uptick in asset groups, including cryptocurrencies.
Nonetheless, Henrik remains only short-term optimistic, sensing we’re nearing the end of the road.
“Honestly, I am optimistic—but only in the very short term. I believe we are in a ‘sugar coma’ like rally, experiencing a frenzy that could further push the markets upward by early 2026. Yet, my concern is growing that this is the last burst of a massive bubble. Ray Dalio warned: ‘We are 80% into the bubble, and typically in the last 20%, markets move vertically while nobody looks at the underlying risks.'”
A concerning paradox looms. While the real economy quietly recedes, risk markets ascend. According to the analyst, we are witnessing the indicators of the end stage of significant cycles. Echoing 1999 and 2007, fundamentals decline while stocks reach new heights.
“Currently, I observe a similar scenario. Indeed, an explosive rise might occur in the coming weeks, potentially a parabolic rise that market historians will discuss for years. However, when reality unfolds, a steep fall will ensue. The key takeaway: Enjoy the party, but be aware of the exit route.”
Business Cycle and Cryptocurrencies
Cryptocurrencies are intricately linked to the business cycle and, in 2025, failed to rise as anticipated due to this connection. The non-farm payrolls and ADP employment reports predict a worse outlook than 2025, indicating stalled employment growth—a scenario rarely seen outside recession periods. Henrik suggests that the labor market data implied a leap from mid-cycle expansion to end-cycle slowdown, preventing cryptocurrencies from a genuine rise.
“Beyond economic factors, other classic end-of-cycle indicators are emerging. Manufacturing indices and transport volumes peaked a year ago and are now declining. Corporate earnings growth stalled, and banks tightened credit standards. We aren’t witnessing a sudden crash—rather, this is a gradually deteriorating scenario that’s easy to overlook as asset prices rise.”
Thus, I describe this environment as resembling 2007 (a slow reversal of the cycle) rather than 2020 (an abrupt external shock).
In 2006-07, the housing market collapsed, employment slowed, and the yield curve inverted—while stocks continued reaching new heights. Currently, similar elements exist: a prolonged housing market stagnation, a long-standing inversion we just experienced, declining leading indicators, weakening employment, and even early spikes in unemployment claims. Despite the crowds enjoying the markets, the business cycle continues on borrowed time.”
Recession Is Looming
In 2023, recession bells were ringing much more loudly on Wall Street than today. While now the focus is on growth, some core indicators point towards an impending recession, signaling a potential cryptocurrency collapse.
“Core indicators like GDP remain positive (a moderate growth was likely recorded in Q4 2025), and consumer spending held up longer than many expected (partly due to remaining savings and wage growth). But recession storm clouds are gathering, and I anticipate rain will soon fall. Several classic recession signals are currently flashing strongly. Most notably, the yield curve, long inverted, is now steepening rapidly. Historically, a severe inversion of the 10-year and 3-month Treasury yield spread followed by a sharp upward turn has heralded a recession. We are witnessing just that now: the Fed’s aggressive rate hikes inverted the curve deeply during 2022-24, and now, with rate cuts on the horizon, the curve is turning upward again.”
2026 is shrouded in uncertainty. How fast will the new Fed Chair proceed with rate cuts? Can labor markets quickly recover? Can Trump secure a midterm win? Will cryptocurrency regulations progress on a compressed timeline? The answers to these questions will dictate the path cryptocurrencies take in 2026. However, Henrik, a renowned figure in macroeconomics, remains skeptical.
