Creator: Cosmo Jiang, Pantera Capital
Compiled by: Deep Tide TechFlow
Deep Dive: Pantera Capital’s annual report reveals the harsh actuality of the crypto market in 2025—it wasn’t a 12 months pushed by fundamentals, however relatively by macroeconomics, positioning, and market construction. Bitcoin solely fell 6%, however most tokens plummeted by 60%, demonstrating excessive market divergence. For buyers and professionals seeking to survive in 2026, understanding these drivers is extra necessary than blind optimism.
2026 Market Outlook
The returns in the crypto market in 2025 won’t be pushed by fundamentals. It will likely be a 12 months dominated by the macro surroundings, positioning, fund flows, and market construction results—particularly for property aside from Bitcoin.
Reviewing the timeline of main macroeconomic and coverage turning factors all through the 12 months helps to grasp why market traits are so disjointed.
The 12 months started with the US presidential inauguration, which in the end proved to be a basic “news-driven sell-off” second and an early warning signal of volatility. In the following months, danger urge for food fluctuated wildly—from optimism surrounding the announcement of the US Strategic Bitcoin Reserve to renewed strain from “Liberation Day” tariffs. Constructive progress arrived mid-year, together with the passage of the GENIUS Act, the rise of digital asset treasuries (DATs) comparable to Bitmine Immersion, and the Federal Reserve’s rate of interest cuts, which stabilized market sentiment for a number of months.
The fourth quarter noticed a decisive turning level, with a number of challenges rising concurrently. The sell-off on October tenth triggered the largest cascading liquidations in crypto historical past—surpassing the Terra/Luna crash and the FTX collapse—wiping out over $20 billion in notional positions. The market wants time to digest this shock. In the meantime, key marginal consumers (DATs) all through the 12 months started to exhaust incremental buying energy. This downward momentum was amplified by seasonal pressures, together with tax-loss promoting (notably in ETFs and DATs), portfolio rebalancing, and systemic CTA flows at year-end.
Bitcoin closed barely decrease in 2025, down about 6%. Ethereum fell about 11%. From there, efficiency deteriorated sharply. Solana fell 34%, and the broader Universe token (BGCI excluding BTC, ETH, and SOL) fell almost 60%.
That is a particularly slim market. This divergence turns into much more pronounced when observing the reward distribution of the token universe.
Solely a small fraction of tokens generated optimistic returns. The overwhelming majority skilled deep drawdowns—the median token fell by 79%.
A year-long altcoin bear market
The most underestimated actuality in 2025 could also be that the non-Bitcoin token market really entered a bear market as early as December 2024.
The complete market capitalization of cryptocurrencies excluding Bitcoin, Ethereum, and stablecoins peaked at the finish of 2024 and has been on a gradual decline ever since—down about 44% by the finish of 2025. From this attitude, it was a 12 months that no less than at instances seemed fairly good for Bitcoin, however for the relaxation of the market, it was a continuation of an unresolved bear market.
Portfolios with important publicity to small- and mid-cap tokens are structurally struggling.
The divergence between Bitcoin and the broader token market displays basic variations. Bitcoin advantages from a single, broadly understood narrative—digital gold—and more and more from mechanistic demand pushed by sovereign states, governments, ETFs, and company treasuries. In distinction, different tokens signify a heterogeneous set of disruptive applied sciences with much less standardized entry, much less institutional assist, and extra complicated worth seize dynamics.
This differentiation is obvious in costs.
Structural resistance confronted by tokens
In 2025, a number of forces intensified the strain on the broader token complicated.
1. Worth accumulation and investor rights
One of the most enduring challenges is the unresolved concern surrounding worth accumulation. In conventional inventory markets, shareholders profit from clear authorized claims to money move, governance, and residual worth. In distinction, tokens usually depend on protocol-level mechanisms enforced by code relatively than authorities companies.
This 12 months, a number of high-profile circumstances have introduced this pressure to the forefront, notably these involving the acquisition or restructuring of token-based ecosystems with out direct compensation to token holders, together with Aave, Tensor, and Axelar. These occasions have reverberated all through the market, undermining confidence even in initiatives with comparatively robust token economics.
On this context, digital asset shares outperformed tokens, benefiting from a clearer path to worth seize at a time when buyers had been already looking for defensiveness.
2. On-chain exercise slowed down.
The fundamentals of the blockchain additionally softened in the second half of the 12 months.
On key metrics—together with layer-one community income, decentralized utility charges, and energetic addresses—exercise has slowed. Notably, stablecoin provide continues to develop, indicating continued adoption of blockchain for funds and settlements. Nonetheless, a lot of the financial worth related to stablecoins flows to off-chain equity-based companies relatively than token-based protocols.
In actuality, the underlying layer in use continues to exist, however marginal, procyclical exercise is declining. This shift is instantly mirrored in token value actions.
3. The rotation of speculative capital
Lastly, the move of funds reversed. Marginal capital supporting a broader spectrum of tokens has traditionally been pushed by speculative retail buyers. Whereas institutional adoption continues to develop, it stays largely concentrated in property accessible via ETFs, together with Bitcoin, Ethereum, and, at the finish of the 12 months, Solana.
By 2025, speculative consideration had shifted to different areas.
ETFs noticed important inflows into gold, silver, and rising thematic buying and selling (comparable to quantum computing), whereas inflows into digital asset ETFs slowed and turned detrimental by year-end. This rotation occurred simply as token breadth deteriorated, reinforcing downward momentum.
Sentiment, Positions, and Historic Background
By the finish of the 12 months, sentiment had compressed to ranges traditionally related to give up.
The Concern & Greed Index has reached readings final seen during times of acute stress, together with after the FTX crash. In the meantime, perpetual futures funding charges have declined, indicating lowered leverage and fewer extreme hypothesis.
Seasonal components additionally performed a task. December has traditionally been a weak month for Bitcoin and the broader crypto market, with tax-loss sell-offs, portfolio rebalancing, and liquidity constraints creating mechanical pressures unbiased of fundamentals.
Importantly, from a longer-term perspective, the period of the present non-Bitcoin pullback could be very according to earlier cycles.
The bear markets of 2018 and 2022 lasted roughly 12 to 14 months. The present pullback, calculated from the peak at the finish of 2024, is now inside the similar vary. This does not assure a backside, but it surely does point out that important time- and price-based compression has occurred.
Why the outlook begins to enhance from right here
Regardless of the challenges forward in 2025, there are a number of causes to stay constructively optimistic about the future.
First, institutional adoption continues to broaden. Enterprises are more and more integrating blockchain into their core merchandise—from Robinhood’s tokenized shares to Stripe’s growth of stablecoin infrastructure, and JPMorgan Chase’s tokenization of deposits. On the capital aspect, sovereign reserves have been established, and securities companies, retirement platforms, and enormous asset administration firms have considerably lowered the obstacles to entry.
Secondly, product-market match is changing into clearer. Stablecoins and prediction markets gained breakthrough consideration and adoption as outstanding use circumstances in 2025, whereas broader tokenization and perpetual futures are displaying early indicators of product-market match.
Third, the macroeconomic backdrop is supportive. The US economic system stays resilient, wage progress is outpacing inflation, and company earnings are increasing. The Federal Reserve has now halted quantitative tightening, and liquidity circumstances are enhancing. Traditionally, the mixture of declining long-term yields and unfastened financial coverage has been constructive for danger property, together with digital property.
Lastly, penetration stays shockingly low. As Bitmine’s Tom Lee acknowledged, there are solely 4.4 million Bitcoin addresses holding greater than $10,000 price of Bitcoin, in comparison with 900 million conventional funding accounts globally. In keeping with a Financial institution of America institutional investor survey, 67% of skilled funding managers nonetheless have zero publicity to digital property. Even a modest shift in allocation over time represents a major supply of potential demand.
Conclusion
2025 was a difficult 12 months for most token markets, characterised by excessive divergence, stronger efficiency from mainstream cash, and extended weak spot exterior of Bitcoin. Nonetheless, it was additionally a 12 months of driving institutional adoption, clarifying product-market match, and compressing valuations throughout a lot of the ecosystem.
Alternatives could come up from a robust basic backdrop following a year-long bear market throughout the broader token sector. With sentiment clearing, leverage discount, and important repricing already behind us, ahead positioning appears more and more asymmetrical—supplied fundamentals stabilize and broad-based returns to normalcy. Traditionally, intervals of turmoil have laid the basis for the subsequent part of progress.
[1] The efficiency of the Bloomberg Galaxy Crypto Index (BGCI) doesn’t embody deductions that would scale back efficiency. Any index is for informational functions solely and is meant for instance of normal market efficiency. No index could be instantly in comparison with the efficiency of the Pantera Fund, partly as a result of the index just isn’t actively managed. The funding outcomes of the Pantera Fund should not supposed to foretell or suggest future returns of the Pantera Fund.
PANTERA Retrospective – Wanting Again at 2026
Creator: @JonathanGieg
As we start 2026, we anticipate an much more thrilling 12 months for cryptocurrency than final 12 months. However earlier than turning the web page, we would prefer to take a second to mirror on what 2025 has introduced.
2025 was a landmark 12 months for Pantera. We deployed extra capital than ever earlier than, driving the majority of our new investments and increasing our world footprint in industries and areas we imagine will outline the subsequent decade of cryptocurrency. Concurrently, our portfolio acquired robust public market validation, with 4 portfolio firm IPOs and important strategic acquisitions.
Examine our progress by 2025:
9 predictions for 2026
Creator: @veradittakit
#1 Actual-World Property (RWA) Take Off
As of mid-December 2025, RWA’s complete worth locked (TVL) reached $16.6 billion, accounting for roughly 14% of the complete TVL of DeFi.
predict:
• Authorities debt and personal credit score may no less than double.
• Tokenized shares and fairness could develop sooner when the anticipated “innovation exemption” beneath the SEC’s “crypto initiatives” is rolled out.
• An surprising sector (carbon credit, mineral rights, or vitality initiatives) is poised for explosive progress. This sector is characterised by fragmented liquidity, world distribution, and a scarcity of requirements, points that blockchain-based markets will assist tackle.
#2 AI Revolutionizes On-Chain Safety
AI-powered safety and blockchain growth instruments have turn into extremely highly effective. Actual-time fraud detection, 95% correct Bitcoin transaction marking, and prompt good contract debugging are actually out there, detecting blockchain vulnerabilities price thousands and thousands of {dollars}.
Prediction: In 2026, think about a bigger shift in the direction of on-chain intelligence, the place deterministic, verifiable guidelines take over good contract-based governance. Functions will scan code almost in real-time, immediately figuring out logical errors and vulnerabilities and offering fast debugging suggestions. The subsequent main unicorn can be an revolutionary on-chain safety firm that improves safety by 100 instances.
#3 Prediction markets turn into acquisition targets
$28 billion was traded in the first 10 months of 2025, and the market is consolidating round institutional infrastructure. We reached an all-time excessive of $2.3 billion in the week of October twentieth.
Prediction: This {industry} will see over $1 billion in acquisitions, excluding Polymarket and Kalshi. The profitable platform will construct built-in liquidity tracks and market discovery intelligence to pinpoint the place and why funds are hidden. Neglect the shiny new buttons. It is all about effortlessly empowering customers with superpowers: prompt entry to hidden swimming pools, smarter routing, and predictive order move.
Sports activities-focused platforms like DraftKings and FanDuel have turn into mainstream, partnering with media shops for real-time odds distribution. New entrants specializing in sports activities, comparable to NoVig, will vertically broaden their presence, and new startups will emerge in the Asia-Pacific area, as it’s a area to look at.
#4 AI as your private encrypted co-pilot
As techniques mature and ship extremely personalised experiences that meet customization expectations, client AI platform utilization will surge. Seamless integration makes superior AI really feel easy, remodeling its use from cumbersome to instantaneous.
Prediction: Platforms like Surf.ai will appeal to a various viewers from crypto fanatics to energetic merchants in 2026 via intuitive, superior AI fashions, proprietary crypto datasets, and multi-step workflow brokers. I imagine that the refined know-how and accessible design make Surf the most well-liked software for crypto analysis, providing prompt on-chain market insights as much as 4x sooner than the normal choices out there on different sorts of platforms.
#5 Banking giants put together: G7-pegged stablecoins are imminent
Ten main banks are in the early levels of exploring the issuance of a G7-pegged stablecoin. Monetary establishments are figuring out whether or not industry-wide stablecoins can provide the advantages of digital forex to people and establishments in a compliant and risk-managed method. In the meantime, a gaggle of ten European banks are investigating the issuance of a euro-pegged stablecoin.
Prediction: Main banking alliances will launch their very own stablecoins (regardless of whether or not these pilot initiatives succeed in 2026 or completely different alliances accomplish that).
#6 Privateness, Funds, Sustainability: The Massive Three in Establishments
Privateness applied sciences are thriving in institutional use, with transparent-confidential combos from protocols like Zama, Canton, and others, although retail use has but to search out traction or scalability. Stablecoins have now reached $310 billion, greater than doubling in market capitalization since 2023, increasing for 25 consecutive months. Perpetual swaps now account for roughly 78% of crypto derivatives buying and selling quantity, and the hole between perpetual contracts and spot choices continues to widen.
Forecast: The hole between institutional and retail privateness will widen in 2026. Stablecoins have a long-term path to over $2 trillion, reaching no less than $500 billion subsequent 12 months, and the momentum of perpetual contracts will proceed into 2026.
#7 Institutional Macro Perspective
As of December 15, 17.9% of BTC holdings are actually in the fingers of listed firms and personal firms, ETFs and international locations.
Prediction: 2026 will not be about hype or memes. It will likely be about consolidation, real compliance, and institutional funding pushed by open market liquidity. Cryptocurrencies will combine into mainstream platforms, improve the monetary panorama, and problem present incumbents.
#8 The largest crypto IPO of all time
There have been 335 US IPOs in 2025, a 55% enhance from 2024; many of these had been crypto-friendly, together with 9 blockchain IPOs. This included crypto-native firms like Circle Web Group (which went public on Could 27, 2025) and crypto-inclusive firms like SPACs; for instance, Bitcoin Infrastructure Acquisition Corp went public on December 2, 2025.
Prediction: 2026 can be a much bigger 12 months for digital asset IPOs. Coinbase states that 76% of its firms plan so as to add tokenized property in 2026, with some aiming for greater than 5% of their general portfolio. Morpho, for instance protocol, has a TVL of $8.6 billion by November 2025.
#9 Accelerated Integration of Digital Property into the Treasury
Again in 2021, fewer than 10 publicly traded firms owned Bitcoin. By mid-December 2025, 151 publicly traded firms held $95 billion, and this quantity rose to 164 firms and $148 billion when together with governments.
Prediction: 2026 will see a brutal pruning. In every main asset class, just one or two gamers will dominate. Everybody else can be acquired or left behind, besides for a long-tail token winner to comply with. It is also globalizing. Metaplanet in Japan has already been aggressive, so the US now not has this pattern as a consequence of the diversification of the world treasury panorama.
Wishing you all the finest in 2026.
To study extra, please learn our Pantera Blockchain Letter.
