The Consensus of the crypto market in the eyes of institutions

1. Change of Market Paradigm: From Cyclical Speculation to Institutional Era

The core driving force that leads the future market is no longer the familiar rhythm.

1. The End of the “Four-Year Cycle Theory”:

Grayscale explicitly pointed out in its annual outlook that the traditional four-year “halving-surge-correction” cycle of cryptocurrencies is failing. The dominant force in the market is shifting from the periodic frenzy of retail investors to the continuous inflow of compliant channels and long-term institutional capital.

2. Structural inflows of institutional capital:

Institutional entry is no longer an expectation, but is currently in progress and is the main line for the future. Its hallmark is the rapid development of exchange-traded products (ETPs) for crypto assets.

● Grayscale data shows that since the launch of the Bitcoin spot ETP in the United States at the beginning of 2024, the global net inflow into crypto ETPs has reached approximately $87 billion.

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● 21Shares predicts that by the end of 2026, the assets under management (AUM) of global crypto ETPs is expected to reach $400 billion. This “stable buying” model changes the characteristics of price volatility.

3. Regulation Transformed from Barrier to Cornerstone:

A clear regulatory framework is transitioning from the greatest uncertainty to a key pillar of market development.

● Grayscale expects that in 2026, the United States will pass bipartisan-supported legislation for a cryptocurrency market structure, which will “institutionalize” the status of blockchain finance in the U.S. capital markets.

● At the same time, the EU's MiCA framework and the already passed GENIUS Act in the United States (targeting stablecoins) are building a clearer regulatory environment globally, paving the way for large-scale participation by traditional financial institutions.

2. Core Growth Engine: Combining Macroeconomic Narratives with Micro-level Implementation

Under the new paradigm, specific investment themes revolve around value storage and financial efficiency.

1. Macro Hedge Demand:

The rising public debt of major economies has raised concerns about the long-term value of fiat currencies. Bitcoin and Ethereum, due to their transparent and programmable scarcity, are seen as “store of value” assets in the digital age, attracting flows of macro allocation funds.

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2. Stablecoins: The Foundation Layer to Trillions of Dollars:

Stablecoins have become a bridge connecting traditional finance and the crypto world.

● 21Shares predicts that its circulating market value will exceed $1 trillion by 2026. Its role is evolving from a trading tool to the “fundamental settlement layer of the internet.”

● a16z pointed out that stablecoins processed approximately $46 trillion in transaction volume last year, nearing three times the scale of Visa, and their smarter inflow and outflow channels will drive their explosion in the payment sector.

3. Asset tokenization reaches a turning point:

Representing and trading real-world assets (such as government bonds and private equity) in the form of digital tokens on the blockchain is moving from proof of concept to scalability.

● 21Shares predicts that the total value of tokenized real-world assets (RWA) will surge from $35 billion in 2025 to over $500 billion by 2026. This not only enhances asset liquidity but also lays the groundwork for the creation of programmable financial products.

4. Deep Integration of AI and Cryptography:

Institutions like a16z have pointed out that the combination of AI and blockchain will go beyond concepts by 2026. Key trends include:

a. Agent Economy: With AI agents autonomously engaging in commercial activities, the demand for a “Know Your Agent” (KYA) identity and credit system has surged, necessitating trustworthy solutions from blockchain.

b. Value Settlement Network: The micro-payments for data and computing power between AI agents require an instant, global settlement network. Smart contracts and new protocols (such as x402) will support the vision of “the internet itself becoming a bank.”

3. Pragmatism in Practice: Competition and Integration in Niche Markets

The market focus will be on areas that can generate actual cash flow and user demand.

● Competition in smart contract platforms intensifies: Ethereum, through Layer-2 scaling, is becoming an institutional-grade tokenization infrastructure (such as BlackRock's BUIDL fund). Solana is rapidly expanding in payment, DeFi, and other areas thanks to its high throughput and low fees. Next-generation high-performance chains (such as Sui, Monad) will compete for market share through architectural innovation.

● Earnings and Sustainable Development: Investors will pay more attention to protocols that can generate sustainable income. Earning through staking or sharing real revenue from protocols will become a common demand. DeFi, especially in the lending space, is expected to accelerate its development.

● Overestimated “noise”: The Grayscale report also clearly pointed out the themes that have been overly hyped in the short term: quantum computing and digital asset treasury companies (DATs) are not expected to have a significant impact on market valuation by 2026.

4. Risks and Discrepancies: Not Uniformly Optimistic

● Amid optimistic voices, cautious viewpoints are equally worth noting. Barclays Bank pointed out that without new heavyweight catalysts, the cryptocurrency market may face a “down year” in 2026, characterized by declining trading volumes and sluggish growth. The slowdown in the spot market has already begun to exert revenue pressure on trading platforms primarily targeting retail investors.

● This reminds the market that the inflow of institutional long-term allocation funds is a slow and continuous process, which may support the valuation bottom and smooth out volatility, but it may not instantly trigger a surge in the market.

In 2026, the cryptocurrency market will no longer be the “Wild West” of yesteryear. Institutionalization, regulatory compliance, and utility embodiment constitute the three pillars of the new stage.

Although there are still differences in short-term price trends, the consensus among mainstream financial institutions is that a cryptocurrency ecosystem is taking shape that is more manageable in volatility, has a more solid infrastructure, and is more deeply connected to the traditional financial world. This is no longer a sprint around the narrative, but a marathon to test the real value of technology and the depth of financial integration. **$ONG **$VELODROME **$GAS **