Cathie Wood believes markets may be underestimating just how different 2026 could look.
In a recent video on Dec. 21, Wood explained that investors have already absorbed multiple shocks in 2025, including tariff turmoil, a government shutdown, and persistently hawkish Federal Reserve rhetoric. Despite this, asset prices have held up better than expected.
However, before the crypto market reaps the benefits of 2026, it needs to cross a major stress test in the coming days.
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Wood argued that the resilience shown by assets is setting the stage for a potential “Goldilocks year,” where growth accelerates even as inflation falls sharply.
“Lots of hope for 2026…but if we are right, growth will be much stronger. And most importantly, inflation will be much, much lower that it has been with tariffs,” Wood said.
Wood has suggested that inflation could drop to zero or even turn negative if key components, such as oil prices and rents, continue to decline.
It is a classic macro reset thesis where growth is strong without inflationary pressure. Historically, this combination has been highly supportive of risk assets following prolonged tightening cycles.
Back in early 2019, the Federal Reserve pivoted after the aggressive tightening cycle between 2015 and 2018, signaling an end to rate hikes as inflation softened and growth slowed but did not collapse.
This restored investor confidence and triggered a broad risk-on shift across global markets. Equities rallied, volatility declined, and liquidity conditions improved, creating fertile ground for speculative and alternative assets.
Bitcoin reacted strongly. After bottoming near $3,100 in December 2018, it rallied to almost $13,800 by June 2019.
If inflation breaks decisively lower while economic growth holds, markets are likely to price that shift in quickly and aggressively. That is the signal Wood says she is watching most closely.
However, crypto markets face a major near-term stress test before any Goldilocks narrative can take hold.
The market is bracing for the expiry of roughly $27 billion in Bitcoin (BTC) and Ethereum (ETH) options on Deribit on Dec. 26.
Large expiries often act as volatility catalysts once dealer hedging rolls off, potentially triggering sharp moves in either direction.
