2025 is a dark year for the crypto market, so what about 2026?

Author| IOSG Co-founder Jocy

 

This is a fundamental shift in market structure, yet most people are still viewing the new era through the logic of the old cycle.

Looking back at the 2025 crypto market, we see a paradigm shift from retail speculation to institutional allocation. Core data: institutional holdings at 24%, retail exit at 66%—the 2025 crypto market has completed its turnover. Forget the four-year cycle; the institutional era of the crypto market has new rules! Let me use data and logic to break down the truth behind this “worst year.”

Surface Data: Asset Performance in 2025

Let’s first look at the surface data—asset performance in 2025. Traditional assets: silver +130%, gold +66%, copper +34%, Nasdaq +20.7%, S&P 500 +16.2%. Crypto assets: BTC -5.4%, ETH -12%, major altcoins -35% to -60%. Looks bleak? Read on.

But if you only look at the price, you’ll miss the most important signal. Although BTC was down -5.4% for the year, it hit an all-time high of $126,080 during the period. More crucially: what happened as the price fell? BTC ETF net inflows in 2025 reached $25 billion, with total AUM hitting $114–120 billion, and institutional holdings accounting for 24%. Some are panicking, while others are buying.

First Key Judgment: Market Dominance Has Shifted from Retail to Institutions

The approval of the BTC spot ETF in January 2024 was a watershed moment. Previously, the market was dominated by retail and OGs; now, it’s led by macro investors, corporate treasuries, and sovereign funds. This isn’t just a change in participants—it’s a rewrite of the game’s rules.

Data supports this judgment: BlackRock IBIT reached $50 billion AUM in 228 days, becoming the fastest-growing ETF in history. It now holds 780,000–800,000 BTC, surpassing MicroStrategy’s 670,000 BTC. Grayscale, BlackRock, and Fidelity together account for 89% of total BTC ETF assets. 13F investment fund plans show that 86% of institutional investors already hold or plan to allocate digital assets. BTC’s correlation with the S&P 500 rose from 0.29 in 2024 to 0.5 in 2025.

Now look at the aggressive strategies of BlackRock and MicroStrategy. BlackRock IBIT’s market share accounts for about 60% of BTC ETFs, with holdings of 800,000 BTC, surpassing MicroStrategy’s 671,268 BTC. Institutional participation continues to rise: 13F reporting institutions hold 24% of total ETF AUM (Q3 2025); more professional institutional investors account for 26.3%, up 5.2% from Q3; large asset management companies hold 57% of 13F BTC ETF positions, and professional hedge funds hold 41% of BTC ETFs—together nearly 98%. This shows that current institutional holdings are mainly these two types of professional investors, not yet including more conservative institutions like pension funds and insurance companies (which may still be observing or just starting to allocate); FBTC institutional holdings account for 33.9%.

Major institutional investors include Abu Dhabi Investment Council (ADIC), Mubadala sovereign wealth fund, CoinShares, Harvard University Endowment (holding $116 million in IBIT), etc. Large traditional brokers and banks have also increased their holdings of bitcoin ETFs. Wells Fargo reported holdings of $491 million, Morgan Stanley $724 million, and JPMorgan $346 million. This shows that bitcoin ETF products are being continuously integrated by major financial intermediaries. The question is: why are institutions continuing to build positions at “high levels”?

Because they are not looking at price, but at cycles.

After March 2024, long-term holders (LTH) cumulatively sold 1.4 million BTC, worth $121.17 billion. This is an unprecedented supply release. But the magic is—prices didn’t crash. Why? Because institutions and corporate treasuries absorbed all this selling pressure.

Three waves of selling by long-term holders: From March 2024 to November 2025, LTH cumulatively sold about 1.4 million BTC (worth $121.17 billion). First wave (end of 2023–early 2024): ETF approval, BTC $25K→$73K; second wave (end of 2024): Trump elected, BTC surges toward $100K; third wave (2025): BTC stays above $100K for a long time.

Unlike the single explosive distribution in 2013, 2017, and 2021, this time it’s a multi-wave, sustained distribution. Over the past year, BTC has been sideways at its high for a year—something that has never happened before. BTC unmoved for over 2 years decreased by 1.6 million (about $140 billion) since early 2024, but the market’s absorption capacity has strengthened.

Meanwhile, what are retail investors doing? Active addresses keep declining, Google searches for “bitcoin” have dropped to an 11-month low, $0–$1 small transactions are down 66.38%, and large transactions over $10 million are up 59.26%. River estimates that in 2025, retail net sold 247,000 BTC (about $23 billion). Retail is selling, institutions are buying.

This leads to the second key judgment: This is not a “bull market top,” but an “institutional accumulation period.”

Traditional cycle logic: retail frenzy → price surge → crash → restart. New cycle logic: institutional stable allocation → narrowing volatility → price center rises → structural uptrend. This explains why prices are sideways, but capital inflows continue.

Policy environment is the third dimension. The Trump administration has already been implemented in 2025: crypto executive order (signed 1.23), strategic bitcoin reserve (~200,000 BTC), GENIUS Act stablecoin regulatory framework, SEC chair replaced (Atkins takes office). Pending: market structure bill (77% probability of passing before 2027), stablecoins buying short-term US Treasuries (scale to grow 10x in the next three years).

Potential impact of the 2026 midterm elections: 435 House seats and 33 Senate seats up for re-election in 2026. In 2024, 274 “pro-crypto” candidates were elected, but banking lobby groups plan to invest over $100 million to counter the influence of crypto donations. Polls show 64% of crypto investors consider candidates’ crypto stances “very important.” Policy friendliness is unprecedented.

But there’s a timing window: the midterm elections are in November 2026. Historical pattern: “Election year policies come first” → intensive policy rollout in the first half → wait for election results in the second half → increased volatility. So the investment logic should be: H1 2026 = policy honeymoon + institutional allocation = bullish; H2 2026 = political uncertainty = increased volatility.

Why is crypto “performing the worst” in 2025, but I’m still optimistic?

Now back to the original question: Why is crypto “performing the worst” in 2025, but I’m still optimistic? Because the market is completing a “turnover”: from retail to institutions, from speculative chips to allocation chips, from short-term games to long-term holding. This process is inevitably accompanied by price adjustments and volatility.

How do institutions view target prices?

VanEck: $180,000; Standard Chartered: $175,000–$250,000;

Tom Lee: $150,000; Grayscale: new highs in H1 2026.

This is not blind optimism, but based on: continued ETF inflows, listed company treasury DAT increases (134 companies globally hold 1.686 million BTC), an unprecedented US policy window, and institutional allocation just beginning.

Of course, risks remain: macro risks include Fed policy and a strong dollar; regulatory risks include possible delays to the market structure bill; market risks include LTH possibly continuing to sell; political risks include uncertainty over the midterm election results. But the flip side of risk is opportunity. When everyone is bearish, it’s often the best time to position.

Final investment logic: Short term (3–6 months): $87K–$95K range-bound, institutions continue to accumulate; Medium term (H1 2026): policy + institutional dual drivers, target $120K–$150K; Long term (H2 2026): increased volatility, watch election results and policy continuity.

Core Judgment: This is not the cycle top, but the start of a new cycle.

Why am I confident? Because history tells us: 2013 was retail-dominated, peak $1,100; 2017 ICO mania, peak $20,000; 2021 DeFi+NFT, peak $69,000; 2025 institutional entry, current $87,000. Each cycle, participants are more professional, capital is larger, and infrastructure is more complete.

The “worst performance” of 2025 is essentially a transition from the old world (retail speculation) to the new world (institutional allocation). Price is the cost of transition, but the direction is already set. While BlackRock, Fidelity, and sovereign funds are accumulating on the left side, retail investors are still worrying “will it fall further.” This is the cognitive gap.

Summary

In summary: 2025 marks the acceleration of the institutionalization process in the crypto market. Although BTC’s annual return is negative, ETF investors have shown strong “HODL” resilience. On the surface, 2025 is the worst for crypto, but in reality: it’s the largest supply turnover, the strongest institutional allocation willingness, the clearest policy support, and the most comprehensive infrastructure improvement. Price -5%, but ETF inflows of $25 billion. This is the biggest signal in itself.

As long-term practitioners and investors, our job is not to predict short-term prices, but to identify structural trends. Key points to watch in 2026 include: legislative progress on the market structure bill, the possibility of expanding the strategic bitcoin reserve, and policy continuity after the midterm elections. In the long run, the improvement of ETF infrastructure and regulatory clarity lay the foundation for the next bull run.

When the market structure fundamentally changes, the old valuation logic fails and new pricing power is rebuilt. Stay rational, stay patient.

Data sources: CoinDesk, CryptoSlate, Glassnode, CoinShares, Farside Investors, Strategy official website, CME Group, Yahoo Finance