Yes, it is possible but it is not famous among the riders because it does not give an aesthetic look to your bike with 29 frames and 26 wheels. 29-sized wheels are recommended for 29 frames, 26 sized wheels would make 29 frames smaller than the real 29 bikes because of the lower-sized wheels, this setup also makes bike pedals lower than the normal position, this setup is not recommended for harder and aggressive terrains which contain rocks and grown roots, because pedals would hit on the ground surface, 26 sized wheels on 29 sized frame would also slow down the speed of bike because the rolling torque has a smaller surface area which is in contact with the ground and two rolls of 26 wheels is equal to one rolling of 29 wheelsets.
Width And Diameter Of the Axle And Freehub:
On a normal basis, 26 wheels have different diameters and widths of internal axles and hubs and 29 wheels are wider and thicker axles than the 26 wheels, based on this difference you have to make the axles and freehub compatible with each other for this setup.
The Hub of 26 wheels has different lengths as compared to the bike frame, you need to buy a new hub and axles to make the setup compatible with each other.
26 wheels have narrower dropouts while 29 wheels have wider dropouts, so you have to make both dropouts or axle clamp holes of the bike frame compatible with 26 wheels. it is only possible if the bike frame is of steel material because steel is stretched but aluminum and carbon frames would break and stretch are risky.
Crankset of 29 wheels are larger and wider but 26 wheels are smaller and smaller crankset also generate smaller torque force and does not causes fatigue for a rider, but if 29 bike contains 29 wheels cranksets with 26 wheels, then you have to apply larger torque force on the pedals because 29 bike crankset is not compatible with the 26 wheels, you have to replace 29 wheel crankset with 26 wheels set to make the setup compatible with each other.
By experiments, it has been proved that 26-sized wheels on 29-sized frames lower the height of the bottom bracket by 30mm. Changing and replacing of rear 29 wheel with 26 wheel on 29 size frame would decrease the bottom bracket by 15mm, but it would be a bad idea to change the rear tire larger wheel with a smaller one because this setup is not recommended for uphill terrains, there are many riders who can ride with rear 26 wheel on 29 frame on downhill terrains because this setup requires a large amount of generated force due to the rear smaller and front larger wheel sizes.
26 wheel with 29 bikes have inaccurate brake linings and also the length of the brake cables are different between 26 and 29 wheels, you have to unmount your brakes from the frame for smaller 26 wheelsets. unmounting and mounting brakes is a complicated and difficult process and also time-consuming, while sometimes the left and right v brakes and cantilever brakes need to adjust an accurate distance between the smaller wheels and larger frame size.
But if disc brakes and rim brakes are not compatible with the new smaller-sized (26-sized) wheels then there are brake adapters available online and in mechanic shops, which will work fine with the smaller wheels and disc brake and rim brakes both will stay compatible with the new wheelsets.
If the 29-sized frame is comap[tible for disc brakes and the new smaller sized 26-sized are also comaptible for the disc brakes, then you can easily swap smaller and larger wheels on larger frames, but if the wheel or frame is comaptible with the rim brakes and you are swapping with the disc brakes, then it is not possible, and the whole setup ruins, because you would not be able to install rim and disc brake with the new swapped wheels.
There is a noticeable difference in 26 wheels and 29-wheel cassettes, but you can use 29-wheel cassettes with 26 wheels, although it is not recommended by the company or any mechanic builders because it is not a long-lasting and compatible setup, you can utilize this setup for temporary use.
It is hard to handle larger 29-sized wheels for lower height riders and almost for a couple who are gathering together on the trails just for fun purposes because 29-sized wheels are used for hard and tough terrains for those riders who have larger strength and power to handle the bike on the trails, but if your trails are also different from them and you want to handle your bike in much easier ways then smaller 26 sized wheels are the best for handling.
Changing or swapping from larger sized to smaller sized wheels is an old traditional setup but mostly the riders are swapping their smaller wheels with the larger wheels if your bike has 26 wheels you are swapping these wheels with large sized 27.5 and 29 wheels then it is a compatible and worthy setup, but it is the opposite way of swapping and in this setup, you have to do many modifications in your bike like you have to buy brakes, bottom bracket, hub axle and the dropouts of the frame to make compatible with the smaller sized wheels which is almost an expensive way, to prevent from these conditions you can simply buy a new bike with smaller sized wheels that would the better way of preventing your bucks.