The first quarter of next year could be more Bitcoin-friendly than the second half of 2025, not because bank-run stablecoins will appear overnight, but because the pipes to supply retailers and advisors will simply widen.
Vanguard has lifted its crypto ban and opened up access to spot ETFs to approximately 50 million customers. Bank of America advisors have been able to recommend crypto allocations of 1% to 4% since early January.
Meanwhile, the FDIC’s Dec. 16 notice of proposed rulemaking under the GENIUS Act starts the clock on bank-issued stablecoins, a structural change that could reshape dollar-based rails on public chains in late 2026.
Timing defines the story. The circulation landscape will change in January, and the regulatory infrastructure for stablecoin issuers under federal oversight will take shape over 12 to 18 months.
While Q1 will be a story of wealth channel expansion that meets favorable seasonality, the NPRM tells us where the next wave of on-chain dollar liquidity will begin.
Wider distribution of wealth
Vanguard’s turnaround is significant in terms of scale. The $11 trillion asset manager spent years discouraging exposure to cryptocurrencies. In early December, the company reversed that stance, allowing customers to trade third-party ETFs and mutual funds that hold Bitcoin, Ethereum, and other digital assets.
Despite Vanguard refusing to launch its own crypto product, the fact that it is accessible to 50 million investors worldwide represents meaningful retail addressability.
Although Bank of America’s guidance is implemented differently, the goal is similar. Starting January 5, Merrill and private bank wealth advisors will be able to proactively recommend crypto ETPs, rather than simply executing trades initiated by their clients.
The bank directs appropriate clients to allocate between 1% and 4% in the major U.S. Bitcoin ETFs. The infiltration of conservatives means tens of billions of dollars of accessible wealth that was previously locked out.
This does not guarantee inflow. The portfolio of models progresses slowly, with compliance reviews filtering who is proposed. However, the infrastructure now exists for traditional savers to access cryptocurrencies through channels that were closed until this quarter.
The marginal buyer in early 2026 looks more like a retirement account with an added 2% BTC position than a leveraged crypto fund.
Seasonality favors Q1, but with caveats
Historical patterns support the setup. Since 2013, Bitcoin’s average February return has been in the mid-teens, and February is rarely negative. Trends in March are similarly positive.
The average return for the first quarter is over 50%, typically the second best quarter after the fourth quarter.
This year, however, broke that pattern, with the first quarter ending with a 12% decline, Bitcoin’s worst first quarter in a decade, as investors sold off due to macro uncertainty, even as Narrative and ETF inflows halved.
Seasonality is a trend, not a law. The difference this time is that the positioning feels clearer and the sell-side goals have been reset lower. Standard Chartered has lowered its end-2025 forecast from $200,000 to around $100,000, and its 2026 target from $300,000 to $150,000.
Analysts say the upside will depend on weaker demand for government bonds in digital assets and steady ETF inflows rather than more leverage in corporate bonds.
Rally is tighter and more sensitive to flows, rates, and access, and that’s exactly where distribution pipes matter most.
What the FDIC has proposed under GENIUS
The Dec. 16 rulemaking is narrowly focused. It establishes the application process for FDIC-supervised state banks to have their subsidiaries issue “payments stablecoins” under the GENIUS Act.
Key elements include customized applications evaluated based on legal factors such as reserve maintenance, capital and liquidity, risk management, governance, and redemption policies.
GENIUS defines a payments stablecoin as a digital asset used for payments that must be redeemed by the issuer with a fixed monetary value. The law requires high-quality reserves, detailed public information, and one-to-one support by monthly reports prepared by accountants.
Rehypothesis is prohibited except in narrow circumstances.
The reason this won’t be a driving force in Q1 is due to timing. The NPRM opens a 60-day comment window, and GENIUS itself will not become effective until January 18, 2027, or 120 days after final implementation of the regulations, whichever comes first.
Even in an aggressive scenario, the earliest realistic start date for FDIC-supervised bank subsidiaries to adopt on-chain dollars is the end of 2026.
Bank stablecoins will reshape liquidity and ultimately
The GENIUS framework points to a dominant dollar token issued by insured bank subsidiaries on the public chain based on uniform federal regulations.
Even if a few large banks go that route, they could bring cheap programmatic dollar liquidity to the rails on which Bitcoin is traded.
Stablecoins issued by bank subsidiaries could serve as collateral and settlement assets for ETF market makers and prime brokers, narrowing spreads and deepening derivatives markets.
The differences between today’s offshore-dominated stablecoin landscape and a world where big banks issue on-chain dollars under federal oversight change who trusts tokens, who can hold them in custodial accounts, and what those tokens can do in institutional workflows.
However, none of this will affect Bitcoin prices in the first quarter. The NPRM is a regulatory milestone that marks where the next wave of on-chain dollar liquidity will begin, not a switch that will flip in January.
Mathematics of distribution rather than stories
The story for Q1 is simpler than the story for the second half of 2026. Vanguard’s 50 million customers and BofA’s wealth advisors represent a tedious distribution calculation. How many accounts will add 1% to 2% BTC positions and how much capital will be transferred?
Seasonal patterns suggest that February and March should be positively biased, but 2025 showed that those patterns may fail. With street targets set low, rallies rely on measurable inflows rather than chasing momentum.
FDIC’s GENIUS rulemaking runs parallel to the structure track. Although liquidity will not increase in the first quarter, if this cycle holds, it will define what the on-chain dollar market will look like in 2027.
Bank-issued stablecoins that are supervised under federal regulations, can be used as payment instruments, and are integrated into ETF workflows will serve as the supporting infrastructure for the next leg, assuming macro conditions cooperate.
The next quarter will test whether expanded circulation and seasonal tailwinds will stabilize Bitcoin after a rough second half of 2025.
GENIUS’ proposal shows what happens next if that test is successful. It is a federally supervised on-chain dollar that turns public blockchains into a trusted payment layer for institutional capital.
Whether the Bitcoin windfall will depend less on headlines and more on how many Vanguard customers clicked “buy” in February, and whether the banks that can issue GENIUS-compliant stablecoins actually decide to build one.
(Tag Translation)Bitcoin
