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The Comeback of Momentum (MMT): A Tactical Move for 2026?

The Comeback of Momentum (MMT): A Tactical Move for 2026?

Bitget-RWA2025/12/12 05:26
By:Bitget-RWA

- Momentum investing's 2026 resurgence hinges on macroeconomic clarity, tech innovation, and institutional adoption of systematic strategies. - 2025 performance showed 113-basis-point U.S. outperformance led by Tesla/NVIDIA, bolstered by Fed rate cuts and AI optimism. - Institutional crypto adoption accelerated via $50B+ ETFs and tokenization, with 2-5% 2026 digital asset allocations projected. - 2026 catalysts include regulatory reforms, 74% market correction expectations, and agentic AI/quantum computing

Momentum Investing: Setting the Stage for 2026

Momentum investing has once again taken center stage in global financial markets, fueled by sweeping macroeconomic changes, rapid technological progress, and shifts in institutional asset allocation. As 2026 approaches, investors are left to ponder: Will momentum strategies remain effective in the coming year? To answer this, it’s essential to analyze the evolving market forces and institutional trends that are shaping the investment environment.

Momentum in 2025: Building Blocks for the Future

Throughout 2025, momentum strategies delivered impressive results, especially during the third quarter, where they outpaced global benchmarks. In the United States, stocks with strong momentum rebounded notably in September, surpassing the broader market by 113 basis points. Major contributors to this surge included Tesla and NVIDIA, whose performance was buoyed by a Federal Reserve rate cut of 25 basis points and robust earnings from the AI sector. These factors reinforced investor confidence in high-growth, high-beta stocks. Internationally, momentum gains were complemented by value-oriented sectors such as healthcare and financial services, indicating a broader range of drivers behind the trend.

Momentum Investing Chart

Looking ahead, the durability of momentum strategies into 2026 will depend heavily on the macroeconomic landscape. Central banks, particularly in the U.S., will play a crucial role, as inflation trends and policy decisions under new leadership could introduce fresh volatility. Meanwhile, the ongoing narrative around AI-driven growth may help justify higher market valuations, such as the S&P 500’s forward price-to-earnings ratio of 23.

Institutional Embrace: Systematic Approaches and Digital Assets

In 2025, institutions accelerated their adoption of systematic investment strategies, spurred by clearer regulations and technological breakthroughs. The enactment of the GENIUS Act in July 2025 and the launch of U.S. spot Bitcoin ETFs have elevated digital assets to a mainstream investment category. Industry giants like BlackRock and Fidelity have seized this opportunity, with BlackRock’s iShares Bitcoin Trust ETF alone accumulating more than $50 billion in assets.

Structural shifts in the cryptocurrency market—such as institutional investors absorbing more Bitcoin than is issued daily and the growing use of crypto as collateral in derivatives—have contributed to lower volatility and longer market cycles. This marks a transition from retail speculation to institutional accumulation, with significant implications for Bitcoin’s price outlook. By 2026, it’s anticipated that institutions will allocate between 2% and 5% of their portfolios to digital assets, potentially unlocking $3–4 trillion in new demand.

Key Drivers for 2026: Regulation, Economics, and Technology

  • Regulatory Progress: Emerging markets are introducing reforms that improve access to private and semi-liquid funds, with 65% of institutions favoring active management to navigate ongoing uncertainty. In the U.S., the integration of tokenized assets and stablecoins into established financial systems—championed by firms like BlackRock—signals growing acceptance of digital infrastructure.
  • Economic Uncertainty: According to a Natixis survey, 74% of institutions expect a market correction in 2026, with nearly half predicting a decline of 10%–20%. This outlook is prompting a shift toward alternative investments, with 65% of respondents preferring a 60:20:20 portfolio mix (including private equity, infrastructure, and crypto) over the traditional 60:40 allocation.
  • Technological Advancements: Innovations such as agentic AI, quantum computing, and asset tokenization are transforming institutional strategies. Agentic AI streamlines complex processes, while quantum computing enhances risk assessment. The tokenization market, now valued at $25 billion, offers immediate settlement and lower intermediary costs, making it increasingly attractive to institutional investors.

Strategic Considerations for 2026

The continued success of momentum investing in 2026 will depend on how well strategies adapt to these evolving catalysts:

  • Active Management Takes the Lead: A majority—62%—of institutions now favor active over passive approaches, highlighting the importance of selectivity in a fragmented market.
  • Shifting Geographic Focus: Institutions are reducing their exposure to U.S. equities and increasing investments in Asia-Pacific and European markets, seeking greater diversification and value.
  • Deeper Technology Integration: The adoption of agentic AI and quantum computing will refine portfolio construction, while tokenization and stablecoins are set to improve liquidity and market access. These technological shifts will play a pivotal role in shaping institutional strategies.

Final Thoughts

The revival of momentum investing in 2026 is not guaranteed, but it remains a strong possibility for those able to navigate economic headwinds and harness regulatory and technological advancements. Institutions that emphasize active management, diversify into alternative assets, and embrace cutting-edge technologies will be best positioned to benefit from momentum’s potential. Nevertheless, the path forward is uncertain—geopolitical risks, policy changes, and market corrections could challenge even the most robust strategies. In this climate, adaptability and strategic foresight will be essential for investment success.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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