The Ninth Year of IOSG: Reconstruction of the 2026 Crypto Market and Structural Opportunities

Author: IOSG Ventures Team

Mainstream Assets

Bitcoin

A year ago, we outlined two distinctly different development paths for Bitcoin: the "optimistic scenario" posits that institutional adoption and government interest will drive the asset forward, while the "pessimistic scenario" suggests that failure to achieve these milestones will trigger bearish sentiment and potential crisis scenarios.

As we enter 2026, the reality lies somewhere between these two extremes, but closer to the expected lower bound. BTC Set Aside: What Happened in 2025

• Government Actions (Partially Successful): The U.S. government has taken a more passive stance than expected. While generally supportive of the crypto industry, the government has made it clear that it will not use taxpayer money to purchase Bitcoin, instead primarily relying on confiscated BTC to build reserves. Trump's re-election brought crypto-friendly rhetoric and regulatory optimism, but actual government purchases seem to be wishful thinking. The commitment to "innovative ways" to increase reserves has yet to translate into concrete actions.

• Central Banks and Sovereign Wealth Funds (Mixed Results): Most major central banks among the top 20 economies have remained on the sidelines, with few exceptions. However, sovereign wealth funds have begun to establish Bitcoin exposure, although the scale of these purchases remains difficult to assess.

• Institutional Adoption (Mixed Results): MicroStrategy continued its aggressive accumulation strategy for most of 2025, positively impacting prices. However, the market narrative has dramatically shifted. MicroStrategy has publicly stated a willingness to sell BTC in certain circumstances, shifting from pure accumulation to a model more akin to "BTC credit instruments." What was once a boost now seems to be turning into potential pressure and burden. In contrast, Bitcoin ETFs performed exceptionally well, with sustained net inflows throughout 2025, indicating strong demand from traditional financial institutions and retail investors for regulated Bitcoin exposure, becoming one of the most reliable sources of demand for the year.

Bitcoin 2026 Outlook: Macro Dependence and Catalyst Exhaustion

Exhaustion of Unique Catalysts

This cycle has relied on a series of strong Bitcoin-specific catalysts: the SVB bankruptcy and USDC de-pegging crisis, the ETF expectation accumulation throughout 2023, MicroStrategy's continued buying, the launch of spot ETFs in early 2024, and Trump's election victory. Each provided unique, Bitcoin-focused buying pressure.

Looking ahead to 2026, Bitcoin-specific positive catalysts seem scarce. Governments have indicated their positions and are unlikely to become major buyers in the short term. Central banks will not quickly change their risk assessments of BTC. MicroStrategy has exhausted its capacity for large incremental purchases and has shifted its messaging toward potential sales. While ETFs have been successful, they have completed their initial adoption wave.

For Bitcoin to thrive in 2026, it will almost entirely depend on macro factors. The priority order is clear: AI Stocks and Risk Appetite Bitcoin increasingly follows the fate of the hottest assets in each cycle. In the last cycle, it tracked Tesla's bottom and peak within a similar timeframe. In this cycle, we see a similar pattern emerging with NVIDIA. Bitcoin's performance has become deeply correlated with high-beta tech stocks and AI enthusiasm. Federal Reserve Policy and Liquidity Whether the Federal Reserve continues its dovish policy and expands its balance sheet is crucial for the broader liquidity environment. Historically, liquidity conditions have been one of the most important factors influencing Bitcoin prices. With the Fed cutting rates three times in 2025, the direction of monetary policy in 2026 will significantly impact Bitcoin's ability to attract sustained buying.

Emerging Risks in 2026 While positive unique catalysts seem scarce, the potential for negative Bitcoin-specific catalysts is more pronounced: Pressure from MicroStrategy (now rebranded as Strategy) Factors that drove Bitcoin higher in this cycle may become burdens in 2026. MicroStrategy's shift from "always holding" to "willing to sell in certain circumstances" represents a fundamental change. The "circumstances" they outline refer to when their mNAV falls below 1 and they need to sell BTC to meet obligations to creditors. Worryingly, when viewed from a broader perspective, Strategy's model begins to resemble a Ponzi scheme; however, we believe these risks will not materialize in the short term, as Strategy has leveraged its ample liquidity from its stock to build cash reserves that can cover obligations related to dividends over the next three years.

Four-Year Cycle Theory Paradox According to cycle theory, we may be in a phase that can be defined as a Bitcoin bear market. Cycle theory assumes that the Bitcoin market rotates on a four-year cycle, with peaks typically occurring in the fourth quarter of each cycle. Following this pattern, the fourth quarter of 2025 should have been the price peak—indeed, Bitcoin reached around $125,000 during this period, which may mark the cycle's top.

However, the validity of this cycle theory is increasingly being questioned. We believe that cycle theory is, to some extent, coincidental and primarily overlaps with broader macro cycles, rather than representing an intrinsic law of Bitcoin. Aside from concerns about the AI bubble and a more risk-averse attitude, Bitcoin's poor performance in the fourth quarter of 2025 was primarily due to long-term holders selling under the belief that they were acting according to cycle theory while adjusting their positions.

Self-Fulfilling Prophecy Risks: Cycle theory creates a dangerous feedback loop:

• Long-term holders expect a peak in the fourth quarter and sell accordingly.

• This selling pressure suppresses prices during what should be the strongest period.

• The resulting poor performance "confirms" the cycle theory.

• More holders adopt this framework, amplifying future selling pressure.

Breaking the Cycle: If the macro environment remains robust, Bitcoin may eventually break these cyclical constraints and reprice upwards. The first break of the cycle could actually become a positive catalyst that the market has yet to price in.

Technical Risks Entering the Discussion Bitcoin faces two long-term challenges: quantum computing vulnerabilities and questions about its economic and security models. While the latter remains somewhat obscure in mainstream discussions, quantum risks are increasingly entering public awareness. More credible voices are expressing concerns about Bitcoin's quantum resistance, which could undermine its narrative as a "secure, immutable store of value." However, the BTC community is more willing to engage in this discussion early to allow time to find potential solutions.

Bitcoin's Judgment in 2026 As Bitcoin enters 2026, it is not in a uniquely advantageous position driven by crypto-specific narratives, but rather as a macro-sensitive asset whose performance will largely reflect the broader risk market:

Catalyst Exhaustion

Bitcoin-specific positive catalysts have largely been exhausted or realized (government positions are set, MicroStrategy's capacity has reached its limit, and the early adoption wave of ETFs has completed).

Emerging Pressures

Concerns related to MicroStrategy, cycle theory, and quantum risks entering public discussion could lead to repricing, considering that the market may be overpricing these risks, while the risks are unlikely to materialize in the next 12 months: given that Strategy has secured cash reserves to pay creditors over the next three years, it is unlikely to face critical issues in 2026; under the premise of a continued macro cycle, it is only a matter of time before cycle theorists are proven wrong; the likelihood of quantum risks affecting mainstream BTC perception is also low in 2026.

Macro Dependence

Performance will track AI stocks (particularly NVIDIA) and Federal Reserve policy decisions.

Ethereum

Review of 2025 Outlook Optimistic Scenario—Partially Realized Looking back at our 2025 outlook, several potential advantages for Ethereum have begun to materialize, although not fully realized: Institutional Viability (Clearly Successful) This argument has proven correct. Ethereum's dominance in the stablecoin market (with an additional $45-50 billion issued since the GENIUS Act) indicates that institutions choosing blockchain infrastructure consistently select Ethereum as the most trusted asset ledger. This is also reflected in institutional buyers, with ETH DATs able to raise significant funds through major players like Bitmine.

Developer Ecosystem and Diverse Leadership (Clearly Successful) The prediction that Base, Arbitrum, and other L2s would drive adoption has been realized. Base, in particular, has become a key growth driver in the crypto consumer space, while Arbitrum has made significant efforts in institutional work, bringing Robinhood into the broader Ethereum ecosystem.

ETH as the Only Alternative to BTC (Timing Misjudgment) The two core long-term unique risks facing BTC—quantum vulnerabilities and security economics—are areas where ETH is better positioned and more future-oriented. ETH remains the only asset that can serve as a viable alternative to BTC as a store of value. However, until these concerns are more validated in mainstream BTC discussions, ETH/BTC price performance is unlikely to benefit from this positioning.

Resilience to Single Entity Risk (Clearly Successful) The absence of an equivalent entity to MicroStrategy has proven to be a significant advantage, as MicroStrategy has shifted from being a supportive force for Bitcoin accumulation to a potential burden. While most DATs may be short-lived, those with significant ETH holdings have a more robust ownership structure with fewer conditions attached.

Pessimistic Scenario—Fundamentally Avoided The negative scenarios we outlined for Ethereum have not materialized as severely as expected: Leadership Vacuum (Resolved) For a long time, there was no sufficiently strong figure to defend Ethereum's positioning in the broader crypto space. Vitalik's attention was spread across many topics, and he was not the opportunistic CEO type focused on price performance. Ethereum had lacked a Michael Saylor-type advocate until recently, which was one of the core reasons for the price dropping below $1,500 earlier this year. Then, Tom Lee largely filled this gap, becoming a major evangelist and advocate for ETH. He fits the bill: excellent sales skills, a high standing in finance, and alignment of interests with ETH price appreciation.

Cultural Challenges ("Woke" vs. "Pragmatic") (Improving) Last year we wrote: "In contrast, Ethereum's culture is often considered more 'woke' than other ecosystems, emphasizing inclusivity, political correctness, and community-driven moral discussions. While these values can foster collaboration and diversity, they can sometimes lead to challenges such as indirect communication, moralizing, and hesitation in making bold, decisive decisions." Fortunately, the Ethereum Foundation has welcomed a new leadership team that is more performance-oriented and capable of tightening the organization to improve efficiency and impact. Subjectively, the atmosphere in the broader community seems to be shifting to better adapt to the current environment. Ethereum 2026 Outlook: Unique Drivers as a Positive for ETH/BTC Ethereum shares macro risk characteristics with Bitcoin—sensitivity to AI stocks, fiscal policy, and Federal Reserve liquidity conditions. However, in terms of unique factors, Ethereum's positioning in 2026 is clearly superior to Bitcoin. Advantages of Ethereum Relative to Bitcoin

• No Major Pressure: Ethereum does not face the same structural risks weighing on Bitcoin. Most importantly, it does not have an equivalent leveraged entity like MicroStrategy, whose potential sell-off could destabilize the market. While most DATs may be short-lived, those with significant ETH holdings use less leverage than Strategy.

• ETH as BTC's Only Alternative: Last year we misjudged the timing of this argument, but if any of the previously discussed unique risks to BTC materialize—including discussions around quantum vulnerabilities and economic/security risks—this should bode well for the ETH/BTC ratio.

Unique Catalysts: Stablecoin and DeFi Dominance Thesis Perhaps most importantly, Ethereum has just begun to reveal positive unique catalysts. After years of being considered "one of the most hated assets" in the crypto space—experiencing significant pressure and volatility from 2023 to 2025—the conditions for Ethereum's revival are maturing. Undeniable Stablecoin Leadership The data is clear: Ethereum dominates the stablecoin market. This is reflected in several ways.

• Asset Balances: Ethereum accounts for nearly 60% of the total market cap of stablecoins, showcasing clear network effects and market preference.

• Liquidity Dynamics: Since the announcement of the GENIUS Act, Ethereum has absorbed $45-50 billion in new stablecoin issuance. This indicates that when new stablecoin demand arises, it disproportionately flows to Ethereum.

A Decade of Reliability Ethereum has not experienced any major performance issues or outages in the past 10 years. This operational record is irreplaceable and crucial for its positioning as the foundation of global liquidity infrastructure. When traditional finance considers blockchain integration, Ethereum's reliable management of billions of dollars in value provides unparalleled credibility.

DeFi as Ethereum's Moat Ethereum's DeFi ecosystem may be its most significant competitive advantage. Ethereum is the only blockchain capable of effectively deploying billions of dollars through battle-tested smart contracts.

• Time-Tested Security: Smart contracts like Aave, Morpho, and Uniswap have operated for years, locking in billions of dollars in total value without major security breaches. Despite representing a huge "honeypot" for hackers, these contracts have proven their resilience.

• Deep Liquidity, Composability, and Capital Efficiency: The ability to combine different DeFi protocols creates network effects that are difficult for competing chains to replicate. Complex financial products can be built by combining existing primitives—this capability requires technological infrastructure and deep liquidity. The best examples are the composability of Ethena, Aave, and Pendle. This makes the Ethereum mainnet the only center for capital-intensive use cases.

Regulatory Clarity Positive regulation around the crypto industry should facilitate more integration between traditional finance and crypto. The convergence of macro timing, regulatory clarity, and institutional adoption makes Ethereum the primary beneficiary of traditional finance's entry into crypto. With a robust blockchain record and proven DeFi infrastructure capable of securely managing billions of dollars, Ethereum offers a combination of security, liquidity, and regulatory visibility that competing chains cannot match.

After years of underperformance and skepticism, Ethereum may be on the verge of a sentiment reversal. Markets tend to reward assets that have been "abandoned" once fundamentals begin to improve significantly. Ethereum's infrastructure improvements, stablecoin dominance, and positioning for institutional adoption could drive repricing in 2026.

Ethereum 2026 Risks: The Battle for Asset Perception While Ethereum's fundamental positioning entering 2026 appears strong, several risks could undermine its performance—most notably the ongoing debate about what ETH represents as an asset.

Asset Classification Battle Core Debate Unlike Bitcoin, which has reached a relatively clear consensus as "digital gold," Ethereum is still in the process of market perception discovery. This ambiguity creates vulnerabilities that skeptics and conflicting interest groups actively exploit. Two Competing Narratives

1. Monetary Asset View (Bullish): Advocates within the Ethereum community, including notable figures like Tom Lee, have been pushing the "digital oil" analogy—positioning ETH as a productive monetary asset with utility. This narrative has gained traction, supporting Ethereum's valuation at a monetary premium similar to Bitcoin.

2. Cash Flow Asset View (Bearish): A significant portion of the market—including Bitcoin extremists and traditional finance skeptics—attempts to categorize Ethereum fundamentally differently from Bitcoin. They argue that Ethereum should be valued like the following assets:

• BlackRock: Valuation should be a fraction of managed assets.

• Nasdaq or exchange operators: Using a fee-based DCF (discounted cash flow) model rather than a monetary premium.

Cognitive Manipulation Ethereum is particularly susceptible to narrative attacks because its value proposition is more complex than Bitcoin's simple "digital gold" story. We have witnessed in previous cycles that skeptics have a disproportionate ability to negatively influence perceptions of ETH as an asset. Why Ethereum is More Vulnerable

• Younger Asset: Compared to Bitcoin's 15+ year record, market consensus is less mature.

• More Complex Story: Programmability, DeFi, stablecoins, Layer 2—more difficult to distill into a simple narrative.

• Decentralized Leadership: Multiple voices and interests make it easier for opponents to create confusion.

Layer 2 Debate As Ethereum's Layer 2 ecosystem flourishes (Base, Arbitrum, etc.), questions about value accumulation arise:

• Are L2s enhancing or undermining ETH? If most activity and fees remain on L2, can mainnet ETH capture value?

• Liquidity Fragmentation: Multiple L2s may dilute rather than enhance Ethereum's network effects.

Earlier this year, we wrote about this topic: L2 fragmentation can be addressed through two main avenues:

1. Market dynamics (natural selection) may organically consolidate the ecosystem, leaving 2-3 significantly dominant general-purpose L2s, while others either fade away or pivot to stack-based approaches—serving rollups for specific use cases.

2. Establishing robust interoperability standards can reduce friction within the broader rollup ecosystem, weakening any single rollup's potential to establish a dominant moat.

Ethereum should actively promote the latter scenario while it still has influence over L2. This influence is diminishing daily; the longer Ethereum delays, the less effective this strategy becomes. By nurturing a unified L2 ecosystem, Ethereum can restore the composability advantages that once defined its mainnet, enhance user experience, and strengthen its competitive edge against monolithic blockchains.

Current Assessment

While the L2 fragmentation debate is ongoing, the Ethereum mainnet has successfully maintained its dominance in large-scale capital deployment. No L2 has enough influence to threaten the mainnet's value accumulation. However, if L2s continue to grow without sufficient interoperability standards, this remains a risk that needs monitoring.

Ethereum's Judgment in 2026 Ethereum enters 2026 with a stronger unique positioning than Bitcoin, despite sharing similar macro sensitivities:

Stablecoin Dominance

Holding 60% of the stablecoin market cap, with an additional $45-50 billion issued since the GENIUS Act, showcasing clear institutional preference, most likely to benefit from further growth in stablecoin market cap.

DeFi Moat

The only blockchain capable of effectively deploying billions of dollars through battle-tested protocols (Aave, Morpho, Uniswap) with proven security over the years.

Institutional Positioning

Given regulatory clarity, operational record, and deep liquidity, most likely to capture traditional financial capital entering the crypto space.

No Pressure

No equivalent entity to MicroStrategy creates potential sell-off pressure; more resilient to single entity risks.

Sentiment Reversal Potential

After years of being "one of the most hated assets," fundamentals are clearly improving, creating conditions for repricing.

Key Risks

Ongoing asset classification debates and cognitive manipulation attempts remain major threats to valuation.

L2 Monitoring

Fragmentation concerns exist, but the mainnet maintains its dominance in large capital, and it is highly unlikely that anyone will threaten its role as a core asset ledger for large funds: 1) large capital primarily cares about security; 2) gas costs are not proportional to transaction size, making Ethereum extremely cheap for large holders; 3) DeFi moat.

Solana

Review of 2025 Outlook Reflecting on the potential paths outlined for Solana in our 2025 outlook, the reality has ultimately been a mix of two scenarios—leaning more towards the negative.

• "From Hunter to Prey" (Fully Realized): This has played out completely. The emergence of Hyperliquid has particularly harmed Solana's narrative. This chain, which has long claimed to be the most scalable and best suited for CLOB (Central Limit Order Book) exchange platforms, now finds itself surpassed in this use case.

• Overexposure to Meme Culture (Completely Accurate): This concern has proven entirely valid. The ephemeral nature of meme-driven growth is now evident. In hindsight, it is clear—the user attrition rate in the meme casino exceeds 98%. Solana's main argument has been "buying digital Macau," but many overlook that the odds of this digital Macau are set against users at 98%. This has the potential to leave a lasting brand stain on Solana, especially as institutions now seek more capital-oriented sustainable directions.

• DePIN Leadership (Yet to be Proven): This argument has not materialized. While Solana continues to nurture DePIN verticals, it has yet to translate into the expected breakthrough adoption or narrative dominance.

• Developer Leadership in Frontier Verticals (Mixed Results): Solana has demonstrated agility and continues to attract builders, particularly in the consumer startup space. However, advancements in wallet and cross-chain infrastructure have made the choice of underlying chains increasingly irrelevant for most consumer applications. Anyone who has used the latest deposit solutions from Privy and Fun.xyz can attest to this trend.

Solana 2026 Outlook: Seeking Sustainable Narratives Solana shares the same macro sensitivities as Bitcoin and Ethereum but faces more complex unique risk characteristics—entering 2026 with more negative factors than positive. Meme Coin Aftermath Solana emerged from one of the most explosive meme coin cycles in crypto history. While this brought significant short-term attention and activity, it created unsustainable dynamics and brand risks: the meme coin frenzy on Solana exhibits concerning characteristics.

• Extreme User Attrition: User attrition exceeds 98%—meaning almost all participants lost money, while platforms like Pump.fun, insiders controlling Solana's block space, and many problematic teams behind projects profited on the winning side of trades.

• Legal Challenges: Recent lawsuits have targeted Pump.fun and Solana itself, accusing them of promoting unfair gambling activities.

• Brand Risks: What seemed like short-term success—high trading volumes, wallet creations, and attention—may prove to be brand liabilities. The "crypto casino" narrative could hinder institutional adoption and regulatory goodwill. As the meme coin cycle exhausts, Solana faces the challenge of shedding this association.

Centralization Becomes Inevitable Solana's integrated high-throughput architecture is designed to support globally scaled applications with minimal latency. However, this design choice increasingly exposes centralization concerns.

In the blockchain industry, it is becoming increasingly clear that a choice must be made: either build an integrated and centralized solution optimized for performance or embrace a more decentralized modular path. Solana chose the former—prioritizing scalability and speed through centralized physical infrastructure. While this has achieved impressive throughput, it fundamentally limits Solana's credibility for applications that require true decentralization and censorship resistance. Double Zero is a project that, if successful, will lead to further centralization of physical infrastructure around dozens of high-bandwidth fiber providers.

Can Solana Maintain "Integration"? While Solana does not shy away from making centralization trade-offs, a question remains about how much it can defend the premise of an "integrated chain." Much of the discussion at Solana Breakpoint focused on whether Solana can support more complex smart contract logic and heavier computations or if it is primarily designed to maximize throughput for relatively simple transaction logic.

Complex Applications Require Fragmented State: Developers building complex applications on Solana are increasingly moving away from the main state:

• Jupiter's Choice: Jupiter, one of Solana's flagship DeFi protocols, has decided to launch JupNet—a standalone environment competing with Hyperliquid—rather than building on the Solana mainnet. This represents a significant acknowledgment that Solana's global state cannot adequately support certain application needs.

• "Network Expansion": Neon Labs and similar projects are building what they call "Solana expansion," but functionally resemble Layer 2 solutions. These fragment Solana's state, allowing developers to control their own block space and execution environments—effectively acknowledging the limitations of a monolithic global state. The argument posited is that even if Solana can theoretically support any logic, in practice, more computation-intensive tasks often can only be executed across multiple blocks. In this case, the platform cannot control the execution order, which could disrupt the fundamental logic of transactions. While these "expansion" solutions are marketed as extending Solana's capabilities while maintaining a unified state, the reality is more fragmented. Developers need isolated environments with predictable performance, pushing the architecture increasingly towards Ethereum's modular approach.

Competitive Repositioning Issues Awkward Middle Ground

Solana now finds itself in an uncomfortable position between two dominant forces. Ethereum, with its battle-tested infrastructure, dominates liquidity, stablecoins, and DeFi narratives. Hyperliquid dominates the high-performance order book narrative that Solana has nurtured for years. Solana must demonstrate a competitive advantage in at least one of these areas, or it risks being perceived as neither sufficiently decentralized nor maximally scalable.

Before the emergence of Hyperliquid, Solana had a relatively unique positioning—a somewhat centralized but highly scalable integrated chain. Solana actively promoted this narrative, claiming its architecture made it an ideal choice for global order books and high-frequency trading applications. This narrative has become awkward. Today, no competitive order book on Solana can match Hyperliquid's trading volume and performance.

Drift may be one of the more mainstream Solana protocols for perpetual contracts, but it still lacks strong competitiveness against Hyperliquid. So while Solana has spent five years defending its positioning as the most scalable chain, it has now become very awkward that high-end order books are not competitive even on the Solana blockchain, with activity primarily driven by meme coins lacking sustainable dynamics.

This places Solana in a position similar to Ethereum 18 months ago, when Ethereum was caught between Bitcoin and Solana—Solana capturing activity while Bitcoin remained the clear store of value asset. Now we see Solana caught between Ethereum and Hyperliquid: Ethereum dominates liquidity, DeFi, and stablecoin-related activities, while Hyperliquid dominates order book and CLOB perpetual contract trading. If Solana cannot choose one and win competitively, it could have extremely adverse effects on Solana's narrative.

Path Forward: Proven Adaptation and Resilience Professional Execution

It is commendable that Solana remains one of the most professionally operated blockchain organizations in the industry. The Solana Foundation demonstrates a high level of attention to detail and rapid execution. This should not be underestimated—Solana has repeatedly proven its ability to identify opportunities and effectively transform.

Moving Away from the Casino

Recent efforts indicate that Solana is trying to distance itself from the "crypto casino" narrative and seek more sustainable fundamental use cases. This was particularly evident at the recent Solana Breakpoint event, which had a more fintech atmosphere rather than a speculative focus.

Challenges

Solana must successfully expand in at least one of the following directions to maintain its competitive positioning: Capturing Liquidity and DeFi Build a robust DeFi ecosystem capable of competing with Ethereum's maturity and liquidity depth.

• Given the DeFi moat held by the Ethereum mainnet, this is a tough battle. However, Solana seems to be taking steps in the right direction. Some examples include thinking like a CEX and even listing non-Solana assets on-chain to provide more options for Solana traders. I strongly support this initiative, as it was also part of our governance proposal to Arbitrum over a year ago to accelerate its DeFi positioning.

Capturing Order Book Trading Develop a competitive CLOB perpetual contract exchange capable of challenging Hyperliquid's dominance.

• Unfortunately, for Solana, they seem to lack competitive participants in this race, as some major Hyperliquid competitors like Lighter and Aster are outside the Solana ecosystem.

Solana's Judgment in 2026 Solana enters 2026 facing more unique risks than opportunities:

Meme Coin Exhaustion

The unsustainable meme casino cycle driving recent activity is coming to an end, leaving over 98% user attrition and brand damage.

Legal and Brand Challenges

Lawsuits accusing unfair gambling activities threaten regulatory goodwill and prospects for institutional adoption.

Competitive Displacement and Awkward Positioning

Hyperliquid's dominance in CLOB/order books undermines Solana's core narrative as a scalability leader for this use case. Caught between Ethereum (liquidity/DeFi/stablecoins) and Hyperliquid (order books), it lacks a clear competitive advantage in either direction.

Integration Issues

Major projects (Jupiter, Neon Labs) turning to fragmented state solutions indicate limitations in supporting complex applications on a global state.

A Ray of Hope

A professionally operated organization has proven adaptive capacity; it can identify new narratives, but it must demonstrate success in DeFi competition or order book trading to avoid irrelevance in the middle ground.

Summary: The 2026 Crypto Landscape Macro Dependence Dominates

The three major cryptocurrencies (Bitcoin, Ethereum, Solana) share similar macro sensitivities to AI stocks, Federal Reserve policy, and fiscal spending. However, their unique positioning differs significantly.

Bitcoin

Entering 2026 as a purely macro beta asset, crypto-specific catalysts have exhausted, yet the market's potential overpricing of negative catalysts may lead to positive outcomes.

Ethereum

Positioned best among the three, with positive unique drivers (stablecoin dominance, DeFi moat, institutional preference), it can achieve outperformance even under neutral macro conditions as long as the integration of off-chain and on-chain finance continues. The main risk remains the cognitive and consensus issues surrounding ETH's asset classification.

Solana

Facing the most challenging unique landscape, with meme cycle exhaustion, brand concerns, and competitive displacement. It must successfully capture the DeFi or order book market to avoid irrelevance in the middle ground, despite having strong organizational execution.

Looking Ahead

The preceding analysis examined the specific positioning of Bitcoin, Ethereum, and Solana in 2026. Each faces its own opportunities and risks. However, to truly understand the trajectory of crypto, we need to step back and look at the bigger picture. The structural bullish factors underpinning the entire crypto argument operate on a timescale of decades. These macro forces provide the ultimate foundation for all crypto narratives. BTC's Continued Growth Bullish: Currency Depreciation

Since 2000, gold's annualized return has been around 12%. The S&P 500's return has been about 6%. Meanwhile, the M2 money supply has grown by about 6% annually.

The implications are profound: adjusted for currency depreciation, the S&P 500 has essentially provided no real returns over the past 25 years. In other words, when measured against the expansion of the monetary base, stocks have merely served as a means of wealth preservation. Moreover, this preservation only works effectively if you invest 100% of your net worth in that index.

This realization is at the core of the non-inflationary asset argument. As long as major economies rely on continued growth in money supply, depreciation will remain the primary driver pushing non-inflationary assets higher. Breaking this connection with the current economic agenda will be difficult—there is little incentive to do so: governments lack the discipline to address debt issues; furthermore, too much power is concentrated in financial markets, which disproportionately benefit from the depreciation of the denominator at the expense of the non-investing class.

Global Fiat Run "Capital flows to where it is welcomed and stays where it is treated well." The story of currency depreciation is directly linked to a broader phenomenon: the growing distrust of the traditional financial system. For high-net-worth individuals, ordinary citizens, and sovereign nations, cryptocurrencies have become an important tool for hedging against the economic uncertainties of the 21st century.

Driving factors are converging from multiple directions simultaneously.

• Capital Controls: Headlines about potential capital controls are no longer limited to emerging markets. The UK has proposed a £20,000 limit on stablecoins. Discussions about whether major economies might restrict capital flows mark the beginning of a new era of financial repression. Earlier this year, Trump even suggested taxing capital flowing out of the U.S.—a historic precedent few anticipated.

• Weaponization of Currency: The freezing of Russian assets and similar actions against former Venezuelan leaders provide clear examples of this trend that has persisted for over a decade. The weaponization of the financial system is accelerating. This creates strong incentives for nations and individuals seeking alternatives outside traditional banking channels. The U.S. government has been openly exploring innovative means to pressure counterparties. The more unpredictable the sovereigns of the current financial system become, the stronger the impulse for ordinary participants to hedge with alternatives. The choices for hedging vary: countries have the capacity to store precious metals and break their reliance on the existing financial system; individuals can only choose Bitcoin.

• Growth of the Gray Economy: Sanctioned countries are increasingly turning to cryptocurrencies for trade. Russia's use of cryptocurrencies for oil transactions and Iran's acceptance of cryptocurrencies for purchasing weapon systems demonstrate adoption driven by necessity. When traditional channels are blocked, new avenues emerge.

• Institutional Erosion: Criminal investigations into Federal Reserve officials and political interference in central bank appointments have eroded confidence in the institutions that underpin fiat currency credibility. Once trust is lost, it is difficult to rebuild. Any failures of traditional institutions have proven to be bullish for crypto assets.

• Economic Populism: Whether from the left or the right, populist movements share a common thread—distrust of the existing financial system. Voices questioning the current financial order now exist on both ends of the political spectrum. On one hand, Mamdani calls for a land without billionaires. On the other, right-wing economic populists demand that banks yield. Centrists are shrinking.

• Billionaire Taxes: Proposed wealth taxes in multiple jurisdictions create incentives for capital to flee to harder-to-track and confiscate assets. Whether these policies are wise or not, their impact on capital flows is predictable.

Taken together, these forces explain why a borderless, efficient, and sovereign-less track has an increasingly apparent product-market fit in today's era.

End of a 70-Year Trend The pressures described above are not merely theoretical. They have already manifested in the way central banks and sovereign wealth funds allocate reserves.

Perhaps the most important macro chart for understanding the current landscape is the composition of global international reserves. In the 70 years following World War II, the dollar's share of global reserves steadily increased. At its peak, the dollar dominated over 60% of global reserves.

But around 2020, this changed. The share of gold in reserves began to increase for the first time in 70 years. This represents a fundamental shift. Central banks are no longer just discussing diversification—they are taking action. If this trend continues—geopolitical drivers suggest it will—it creates structural buying for hard assets. Bitcoin stands to gain a portion of this demand.

The Crypto Trinity: Digital Gold, Digital Oil, Digital Dollar As regulatory clarity emerges, it is helpful to understand what crypto actually offers. The ecosystem has matured into different value propositions, each serving different purposes. This framework clarifies why different crypto assets serve different purposes—and why the entire ecosystem is greater than the sum of its parts. Bitcoin captures the store of value narrative. Ethereum powers the productive on-chain economy. Stablecoins bridge traditional finance to the crypto world. And DeFi provides the infrastructure for borderless financial services.

Clear Path Forward Understanding these different roles makes it easier to assess future growth potential. The two main pillars of the crypto argument—digital gold and digital economy—both have significant room for expansion.

• Digital Gold (BTC vs. Gold Market Cap): Bitcoin's market cap of about $1.8 trillion currently represents about 6% of gold's market cap of approximately $32 trillion. Just rising to 10-15%—a still modest assumption for an asset positioned as "digital gold"—would imply significant upside from current levels. Gold itself is expected to soar in 2025, greatly expanding the target.

• Digital Economy Growth (Stablecoins vs. M2 Supply): Stablecoins currently account for about 1% of the M2 money supply. Rising to 10%—reflecting mainstream adoption of the digital dollar—would represent a tenfold expansion of the stablecoin market. Infrastructure is being built. The question is how quickly adoption will occur.

The Path to a $2 Trillion Stablecoin Market Crypto serves both ends of the spectrum simultaneously. On one hand, developed economies view alternative financial tracks as a hedge against the current financial system. On the other hand, leaders of the current financial system are making decisions favorable to crypto, as they need alternative buyers for dollars and dollar-denominated debt—especially now that the long-term dollar trend is reversing.

We expect stablecoins to surpass trillions of dollars in market cap over the next decade. The U.S. recognizes their strategic importance for two key reasons.

• For Debt Financing: Stablecoin issuers must hold reserves, typically U.S. Treasuries. Each dollar of stablecoin issued increases inelastic demand for government bonds.

• Extending Dollar Hegemony: Digital dollars extend the influence of the dollar beyond traditional banking channels. In a world where the dollar's dominance is threatened, stablecoins provide a new avenue to maintain influence.

These figures reflect this dynamic. Tether now holds about $135 billion in U.S. Treasuries. This makes it the 17th largest holder of U.S. government debt globally—surpassing holdings from Germany, the UAE, and Saudi Arabia.

We believe that stablecoin issuers will soon become the largest financiers of the U.S. government. This creates a strong alignment of interests between crypto adoption and U.S. government policy objectives—a structural bullish factor that few market participants fully recognize.

Regulatory Tailwinds We often only examine regulatory policies in hindsight. Decades later, we realize how a regulatory decision triggered massive change. We may be at such a turning point now.

Analogy: China's WTO Accession in 2001 China's accession to the WTO triggered a massive reallocation of global capital through a regulatory change.

Manufacturing moved to Asia, and the U.S. accelerated its transition to a service and knowledge economy, resulting in trillions of dollars in annual trade flows and massive dollar outflows. In retrospect, this all seems logical: new rules combined with government agreements inevitably lead to structural capital shifts. The far-reaching implications of this transformation continue to influence public discourse—without the massive economic restructuring of the past two decades, the "America First" agenda would not exist.

Catalyst: The Emergence of a U.S. Crypto Regulatory Framework in 2025 We are witnessing a similar moment. Landmark legislation is establishing on-chain infrastructure as legitimate financial infrastructure.

• GENIUS Act (July 2025): The first federal stablecoin framework, allowing banks to issue on-chain dollars.

• CLARITY Act (passed the House, under Senate review): The jurisdiction of the SEC and CFTC is finally clearly defined, marking the end of the "enforcement-style regulation" era.

• DTCC No-Action Letter (December 2025): The SEC has authorized this custodian, managing over $100 trillion in assets, to tokenize stocks, bonds, and government debt on-chain.

Core Argument: All Valuable Assets Will Migrate On-Chain In hindsight, this moment will be as epoch-making as 2001.

Entry Point for Financial Inclusion: Super Apps and Tokenization Macro tailwinds and regulatory clarity lay the groundwork, but mass adoption requires channels. The next wave of growth in the crypto space will be driven by two complementary forces. Big Tech Companies Bring New Users Big tech companies will play a significant role in driving crypto adoption. For these companies, crypto offers a path to becoming super apps—a platform that integrates payments, social, and financial services. X and Meta are both exploring crypto integration.

Social media companies based in the U.S. and operating in most countries globally are likely to become the "Trojan horse" for global stablecoin adoption. The effect will be to attract liquidity from bank balance sheets and small economies to digital dollars.

Tokenization Brings New Asset Classes To support the growth of stablecoins, a richer variety of assets needs to be available on-chain. Relying solely on crypto-native funding deployment opportunities cannot sustain the scale needed for stablecoins to surpass the $1 trillion mark.

Tokenization of traditional products (stocks, bonds, etc.) is the bridge. Ultimately, the issuance of on-chain native assets represents the future of finance. Institutions like Robinhood and BlackRock will play key roles in this transformation.

DeFi Yield Challenges: From Fundamentals to Structured Yields Historical data shows that for every $1 increase in stablecoin market cap, DeFi TVL increases by about $0.6. This indicates that most new on-chain capital is seeking yield. The growth of stablecoins themselves also relies on DeFi's ability to generate diverse, scalable, and sustainable yields.

The crypto ecosystem has gone through different phases of yield generation. Starting with establishing a crypto risk-free rate (like AAVE), it has gradually evolved into more advanced products. Each iteration requires stronger risk underwriting capabilities while also bringing higher value appreciation per unit of deployed capital. The current landscape presents increasingly complex on-chain yields across multiple categories. We are also seeing stronger interoperability between DeFi protocols, with composability becoming increasingly important. The best example is the strategy involving Ethena, Pendle, and AAVE. In this strategy, Ethena's deposit tokens are split into principal tokens and yield tokens on Pendle. As long as there is a positive spread between AAVE's borrowing rates and Ethena's funding rates, the principal tokens will be used as collateral to borrow more assets on AAVE, which are then redeployed back to Ethena.

This indicates that even familiar strategies can release unique opportunities when deployed in new ways. This should incentivize more participants to tokenize a broader range of yield products and leverage on-chain composability to capture opportunities that do not exist in the fragmented off-chain ledger world.

Another opportunity lies in abstracting the complexity of on-chain yield products, creating a DeFi channel that can dynamically adjust exposure across the broad DeFi landscape. This can be seen as an upgraded version of Yearn's original vision adapting to current needs, where successful DeFi vaults require more active management and risk underwriting. Projects like Yuzu Money are pursuing this path.

Who is Most Likely to Win? This heavily depends on execution. Talent with deep financial engineering expertise, strong risk control capabilities, and experience in the crypto industry is needed. Teams that possess all three are relatively scarce.

Prediction Markets: Growth and Opportunities for Kalshi/Polymarket and Other Derivative Applications We are optimistic about the growth prospects of prediction markets in 2026. The World Cup and U.S. midterm elections will bring significant traffic to the market, especially under the potential catalyst of TGE (Token Generation Events), with expected growth in trading volume. Sports betting will be a highlight, as the mechanisms of prediction markets mature, this vertical is poised for explosive growth and innovative gameplay.

Another important trend is localization. Recently, there has been an increasing number of region-specific topics on Polymarket, particularly events that resonate with young people in Asia, contrasting sharply with the earlier focus solely on the U.S. market. This indicates that leading platforms are beginning to pay attention to global cultural differences, and the incremental market brought about by this is not to be underestimated.

The ecosystem of derivative products will rise alongside the growth of Kalshi and Polymarket. After both platforms began focusing on ecosystem building in 2025, various tools, trading terminals, aggregators, and even DeFi applications have developed rapidly. This opportunity is too obvious, leading entrepreneurs to rush to the market, with rapid product iterations, but it is still too early to judge the winners.

Who is Most Likely to Win? At the level of prediction markets, directly challenging Kalshi and Polymarket is quite difficult. However, the following directions are worth paying attention to:

• Breakthroughs in Innovative Mechanisms: Innovations such as leveraged trading, parlay (multiple bets), futarchy (future governance), long-tail markets, new types of oracles, and settlement methods may open differentiated survival spaces.

• Localization Deep Dives: Focusing on the crypto user base and deeply exploring local niche markets is another path. Kalshi and Polymarket are just starting in this area and have no clear advantages. For teams that understand local culture, regulatory environments, and user habits, this is a real opportunity window.

Winners in the derivative product ecosystem will emerge through rapid iteration. The key is whether they can seize user pain points and establish network effects during the window of expansion for the Kalshi/Polymarket ecosystem.

Neobanks: Natural Beneficiaries of Stablecoin Adoption The adoption of stablecoins will fundamentally reshape banking, likely reducing the scale of traditional banks' balance sheets, leading to numerous chain reactions, which are not the focus of this article. The key question is: how will people manage their stablecoin balances? We believe this is unlikely to be achieved through personal wallets. Instead, Neobanks are likely to become the main beneficiaries of this trend. Understanding the Neobanks opportunity requires understanding the sources and nature of demand.

There are primarily three user groups: crypto-native users, users in developing regions, and users in developed regions.

• Cryptocurrency holders seek access to capital markets, consumption choices, yield opportunities, tax optimization, and credit services. Etherfi is already leading in this category but still has room for improvement in accessing capital markets, yield generation, and credit products.

• Users in developing regions need access to dollar-denominated financial systems, Visa/Mastercard networks, remittance channels, competitive savings rates, and credit. Redotpay currently leads in Southeast Asia, leveraging crypto infrastructure to provide products similar to Revolut. Other regions present significant opportunities for localized solutions and small loan products that can improve user retention.

• In developed regions, opportunities may not seem as apparent due to the existing financial infrastructure. However, as mentioned earlier, the rising uncertainty in global leadership may drive these users toward alternatives.

This creates a triple market opportunity where Neobanks can leverage the same underlying stablecoin infrastructure to serve fundamentally different customer needs.

Who is Most Likely to Win? Accessing capital markets requires creative legal solutions and financial expertise to provide deep liquidity. Providing credit requires financial expertise. Improving yield solutions requires knowledge of crypto and DeFi. Penetrating local markets requires an understanding of local laws, markets, and cultures. These variables provide key differentiation opportunities for new entrants, especially if existing players fail to unlock these capabilities and expand their service offerings.

Evolution of Crypto Payments The global payment system is being reshaped by crypto infrastructure, with large-scale adoption advancing along three different channels. The C2B (Consumer to Business) channel currently still favors traditional finance, as crypto applications need to integrate with existing Visa/Mastercard networks, which have established a strong moat through extensive merchant coverage.

The bigger opportunity lies in P2P (peer-to-peer) flows, where traditional financial transactions are expected to migrate to crypto infrastructure. Facing Neobanks, wallets, and big tech platforms that are integrating stablecoins, Western Union appears to lack a strong moat to defend itself.

The B2B (Business to Business) space may represent the largest opportunity. Crypto payment providers can offer a true alternative for cross-border business payments. This represents a fundamental shift in infrastructure, requiring deep integration of stablecoins with fintech platforms. The core value proposition is significant cost savings and speed improvements. However, the challenge lies in establishing "last-mile" liquidity and local compliance capabilities in key regions so that customers can seamlessly connect to new solutions.

Who is Most Likely to Win? For P2P payments, geographic focus and user experience are paramount: solutions that are ready for use, withdrawal, and consumption are most likely to succeed. For B2B payments, companies that have established relationships with SMEs and large enterprises while possessing regulatory expertise are in the most favorable position.

Internet Capital Markets: The Endgame of Tokenization Blockchain technology has enabled a single, programmable global ledger, allowing capital to flow around the clock, with tokenization enabling any asset to be identified, traded, and settled instantly across borders.

The evolution of tokenization has gone through different meta-cycles: from the initial cryptocurrencies to tokens (like altcoins and digital assets), then to NFTs and meme coins, followed by information markets (prediction markets), and currently encompassing stocks, RWAs, and a wide range of financial derivatives. Looking ahead, frontier areas include collectibles (like trading card games and luxury goods), attention and influence markets, and ultimately, personalized tokens.

With each new meta-narrative, specialized trading infrastructure has followed suit. The crypto trading landscape has evolved from basic Bitcoin exchanges (Binance, OKX, Coinbase, Huobi) to on-chain DEXs (Uniswap) and aggregators (1inch, 0x), then to NFT markets (OpenSea) and terminals (Blur), meme token launchpads (Pump.fun) and terminals (Axiom, GMGN, FOMO), perpetual DEXs (Hyperliquid, Lighter) and their emerging terminals and aggregators, as well as prediction market platforms (Polymarket, Kalshi) and their own emerging terminal infrastructure.

Each meta-narrative requires interfaces tailored for both retail users seeking simplicity and professional users needing advanced features. The current generation of products (focused on perpetual contracts and prediction markets) presents significant venture opportunities as the market matures and integrates with traditional finance.

Who is Most Likely to Win? The terminal and aggregator tracks require a deep understanding of user workflows and excellent product design. In the professional user segment, teams with trading backgrounds and technical depth have an advantage. In the retail segment, consumer product expertise and growth marketing capabilities are more important. Winners will be those teams that achieve the best balance between functional depth and user experience for their target segments, while building moats around liquidity aggregation or unique data/insights.

ICM: Reconstruction of Token Mechanisms in 2026 A significant proposition for 2026 is: how will the tool of tokens evolve? The core issue with current crypto tokens is the imbalance in supply structure combined with flawed incentive designs, leading all participants—exchanges, token holders, teams, VCs—into a game that seems rational but is actually detrimental to all parties. Tokens are treated as financing and liquidity tools rather than product decision tools.

This has led to clear market distortions:

• Mature projects lack the motivation to maintain product operations after issuing tokens or are too distracted by token affairs, affecting product decisions. The result is that good projects simply abandon issuing tokens, bad tokens drive out good ones, and poor projects continue to enter the market.

• Early projects issue tokens without PMF, and after issuance, struggle to secure further financing, failing to attract sufficient institutional support.

The ICM (Integrated Capital Markets) concept was proposed by the Solana ecosystem, but a more general understanding is: how to ensure that more good assets are better launched and continue to maintain their status as good assets. Assets can include early Web2/Web3 company equity, pre-IPO/IPO stocks, etc. This requires breakthroughs in multiple areas: legal discussions, market education, operational efforts, and mechanism innovations, including ownership coins, launchpads, etc. Making tokens better products—this is the crypto-native proposition to be solved in 2026.

Crypto and AI Integration: Creating First-Class Digital Citizens Perhaps the most compelling investment narrative will emerge at the intersection of crypto and AI. Existing internet and financial infrastructures are entirely designed for humans, relegating AI to "second-class citizens," fundamentally constraining AI's economic potential.

Without crypto infrastructure, AI agents face severe constraints. They cannot open bank accounts or make payments, relying entirely on humans for financial transactions. They are constantly blocked by CAPTCHAs and bot detection systems, unable to complete basic online interactions. They cannot interact with other agents to create an economy among agents. They cannot own assets. They are trapped in centralized company servers or clouds, unable to migrate.

Cryptocurrency fundamentally changes this status quo, making AI first-class citizens with true economic agency. With crypto, AI agents can own wallets and autonomously send and receive funds, earn, consume, and invest independently without human intermediaries. They can bypass most bot detection through distributed blockchain networks. They can autonomously discover other AI agents, negotiate with them, and transact, creating an emerging AI-to-AI economy, where economic interests and quasi-crypto consensus and trust mechanisms will determine right and wrong. They can enter into contracts and programmatically execute payments. They can hold digital assets, with ownership enforced by immutable blockchains.

Google has pushed for A2A protocols, providing an open standard for AI agents to communicate, exchange information, and coordinate actions across different platforms and vendors, facilitating interoperable multi-agent systems. However, trust issues remain, which is precisely what the Ethereum ERC-8004 standard aims to address by enabling on-chain identity, reputation, and verification, allowing AI agents to discover, authenticate, and collaborate in a decentralized economy without pre-established trust. These developments collectively unleash AI's ability to participate in programmable, agent-driven commerce on the blockchain.

Who is Most Likely to Win? Visionary entrepreneurs capable of architecting decentralized economies will stand out, where AI agents interact without trust through protocols like ERC-8004. These leaders excel in interdisciplinary innovation, seamlessly integrating cryptography (for secure, immutable trust mechanisms), economics (to design incentive-aligned agent behavior, staking, penalties, and emerging markets), and systems design (to build scalable, interoperable architectures that enable open, cross-organizational agent coordination without gatekeepers).

Resource Aggregation Opportunities The scaling laws driving AI development have become very clear and have been well-validated: more computing power, more data, and more parameters almost inevitably lead to stronger model performance. Thus, this diagram encapsulates the most important insights from the past five years:

Cryptocurrency excels at aggregating resources through carefully designed incentive mechanisms. Its potential scale is remarkable: before the merge, Ethereum's proof-of-work miners provided about 50 times the computing power required to train GPT-4. If properly incentivized and coordinated, this represents a vast untapped capacity.

Data opportunities are equally significant. The crypto industry can aggregate proprietary data from individuals and enterprises on a large scale. On the other hand, protocols like Grass enable distributed scraping of public network data and real-time information access, improving unit economics by utilizing distributed methods to evade bot detection.

The challenge lies not in resource availability but in effective coordination and quality control. With proper execution and incentive design, the crypto industry has real potential to unleash vast resources for AI development, resources that are difficult or impossible to aggregate through traditional corporate structures.

Who is Most Likely to Win? This requires deep technical expertise in distributed systems, AI infrastructure, and game theory design. Teams need to solve challenges related to computing power verification, data quality assessment, and large-scale efficient coordination. Companies with backgrounds in large-scale infrastructure operations and crypto protocol design have the strongest advantages. Winners will be those teams that can achieve decentralized coordination scale efficiencies while maintaining quality standards.

Conclusion The common thread behind these opportunities is convergence; crypto-native capabilities are continuously accelerating their integration with traditional finance, payment systems, and now artificial intelligence. The phase of isolated development has ended, and the phase of overlapping convergence is rapidly advancing. Comprehensive integration is the ultimate destination: blockchain infrastructure will become "invisible" yet indispensable, serving as the underlying engine that supports the next generation of financial and technological services, achieving seamless integration between decentralized and centralized systems, taking the best of both worlds.

For venture investors, the real opportunity lies not in betting on "crypto" or "traditional finance," but in identifying those companies that are building bridges, infrastructure, and applications that will define the future after this convergence. The most successful startups will no longer view crypto as a parallel financial system but as an infrastructure layer: a foundation that enables programmability, global settlement, autonomous agents, resource collaboration, and other capabilities that are fundamentally unattainable within traditional architectures.