IOSG Founder: 2025 is a dark year for the crypto market, but what about 2026?

Author | IOSG Co-founder Jocy

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

In the 2025 crypto market review, we see a paradigm shift from retail speculation to institutional allocation, with core data showing institutional holdings at 24% and retail exiting at 66% ——— the turnover in the 2025 crypto market is complete. Forget about the four-year cycle; the institutional era of the crypto market has new rules! Let me break down the truth behind this "worst year" with data and logic.

Surface Data: Asset Performance in 2025

First, let's 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%, mainstream altcoins -35% to -60%. Does it look grim? Keep reading.

But if you only look at the price, you miss the most important signal. Although BTC was down 5.4% for the year, it reached a historical high of $126,080 during that period. More critically: what happened while the price was falling? BTC ETFs saw a net inflow of $25 billion in 2025, with total AUM reaching $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. The market, previously dominated by retail and OGs, is now led by macro investors, corporate treasuries, and sovereign funds. This is not just a change in participants; it is a rewriting of the rules of the game.

Data supports this judgment: BlackRock's IBIT reached $50 billion AUM in just 228 days, becoming the fastest-growing ETF in history. It now holds 780,000 to 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 currently hold or plan to allocate to digital assets. The correlation between BTC and the S&P 500 rose from 0.29 in 2024 to 0.5 in 2025.

Looking at BlackRock and MicroStrategy's aggressive strategies, BlackRock's IBIT holds about 60% of the BTC ETF market share, with a holding of 800,000 BTC exceeding MicroStrategy's 671,268 BTC. Institutional participation continues to rise: 13F filing institutions account for 24% of total ETF AUM (Q3 2025); the proportion of professional institutional investors has reached 26.3%, an increase of 5.2% from Q3; major asset management companies hold 57% of 13F BTC ETF holdings, and professional hedge fund institutions account for 41% of BTC ETFs, with both categories combined nearing 98% ——— indicating that current institutional holdings are mainly from these two types of professional investors, not including more conservative institutions like pensions and insurance companies (which may still be observing or just starting to allocate); FBTC institutional holdings account for 33.9%.

Major institutional investors include the Abu Dhabi Investment Council (ADIC), Mubadala Sovereign Wealth Fund, CoinShares, and Harvard University's endowment fund (holding $116 million in IBIT), among others. Large traditional brokers and banks have also increased their holdings in Bitcoin ETFs. Wells Fargo reported holdings of $491 million, Morgan Stanley reported $724 million, and JPMorgan reported $346 million. This shows that Bitcoin ETF products are being continuously integrated by major financial intermediaries. The question arises: why are institutions continuing to build positions at "high levels"?

Because they are not looking at the price, but at the cycle.

After March 2024, long-term holders (LTH) sold a cumulative 1.4 million BTC, valued at $121.17 billion. This is an unprecedented supply release. But the amazing thing is ——— the price did not crash. Why? Because institutions and corporate treasuries absorbed all this selling pressure.

Three waves of selling from long-term holders: from March 2024 to November 2025, long-term holders (LTH) sold approximately 1.4 million BTC (valued at $121.17 billion). The first wave (end of 2023 to early 2024): ETF approval, BTC $25K → $73K; the second wave (end of 2024): Trump elected, BTC surged to $100K; the third wave (2025): BTC remained above $100K for an extended period.

Unlike the single explosive distributions in 2013, 2017, and 2021, this time it is a multi-wave continuous distribution. We have been in a sideways market at BTC's peak for a year, a situation that has never occurred before. BTC that has not moved for over two years decreased by 1.6 million coins (approximately $140 billion) since early 2024, but the market's digestion capacity has strengthened.

Meanwhile, what are retail investors doing? Active addresses continue to decline, Google searches for "Bitcoin" have dropped to an 11-month low, small transactions of $0-$1 have decreased by 66.38%, while large transactions over $10 million have increased by 59.26%. River estimates that retail investors net sold 247,000 BTC in 2025 (approximately $23 billion). Retail is selling, while institutions are buying.

This leads to the second key judgment: It is not the "top of a bull market," but rather an "institutional accumulation period."

Traditional cycle logic: Retail frenzy → Price surge → Crash → Restart. New cycle logic: Institutions stabilize allocations → Volatility narrows → Price center rises → Structural increase. This explains why prices are stagnant, yet capital inflows continue.

The policy environment is the third dimension. The Trump administration's policies have already landed in 2025: crypto executive order (signed 1.23), strategic Bitcoin reserves (~200,000 BTC), GENIUS Act stablecoin regulatory framework, SEC chair change (Atkins takes office). Pending: market structure legislation (77% probability of passing before 2027), stablecoin purchases of short-term U.S. Treasury bonds (expected to grow 10 times in scale over the next three years).

Potential impacts of the 2026 midterm elections: 435 House seats and 33 Senate seats will be up for election in 2026. In 2024, 274 "crypto-friendly" candidates were elected, but banking lobby groups plan to invest over $100 million to counter the influence of crypto donations. Polls show that 64% of crypto investors consider a candidate's stance on crypto "very important." The policy friendliness is unprecedented.

However, there is a timing window issue: the midterm elections are in November 2026. Historical patterns show: "Election year policies lead" → Policies intensively implemented in the first half of the year → Waiting for election results in the second half → Increased volatility. Therefore, the investment logic should be: first half of 2026 = policy honeymoon period + institutional allocation = optimistic; second half of 2026 = political uncertainty = increased volatility.

Why is 2025 the "worst performance" for crypto, yet I remain optimistic?

Now back to the initial question: why is 2025 the "worst performance" for crypto, yet I remain optimistic? Because the market is completing a "hand-off": from retail hands → to institutional hands, from speculative chips → to allocation chips, from short-term bets → to long-term holdings. This process inevitably accompanies 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 the first half of 2026.

This is not blind optimism, but based on: continuous inflows into ETFs, listed companies' treasury DAT increasing (134 companies globally holding 1.686 million BTC), an unprecedented policy window in the U.S., and institutional allocations just beginning.

Of course, risks still exist: macro risks from Federal Reserve policies and a strong dollar; regulatory risks from potential delays in market structure legislation; market risks as LTH may continue to sell; political risks from uncertain midterm election results. But the other side of risk is opportunity. When everyone is bearish, it is often the best time to position.

Final investment logic: Short-term (3-6 months): oscillation in the $87K-$95K range, institutions continue to accumulate; Mid-term (first half of 2026): dual drive from policy + institutions, target $120K-$150K; Long-term (second half of 2026): increased volatility, watch election results and policy continuity.

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

Why do I have this confidence? Because history tells us: In 2013, retail dominated, peaking at $1,100; in 2017, ICO frenzy, peaking at $20,000; in 2021, DeFi + NFT, peaking at $69,000; in 2025, institutions are entering, currently at $87,000. With each cycle, participants become more professional, the amount of capital increases, and the infrastructure becomes more complete.

The "worst performance" in 2025 is essentially a transition period from the old world (retail speculation) to the new world (institutional allocation). Price is the cost of transition, but the direction is already determined. While BlackRock, Fidelity, and sovereign funds are building positions on the left side, retail investors are still struggling with "will it drop further?" This is the cognitive gap.

Conclusion

In conclusion: 2025 marks the acceleration of the institutionalization process in the crypto market. Although BTC's annual return is negative, ETF investors show strong "HODL" resilience. On the surface, 2025 appears to be the worst for crypto, but in reality, it is characterized by the largest scale of supply hand-off, the strongest institutional allocation willingness, the clearest policy support, and the most extensive infrastructure improvement. Price down 5%, but ETF inflows of $25 billion. This itself is the biggest signal.

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 market structure bills, the possibility of expanding strategic Bitcoin reserves, and policy continuity after the midterm elections. In the long term, the improvement of ETF infrastructure and regulatory clarity will lay the foundation for the next round of increases.

When the market structure undergoes fundamental changes, the old valuation logic will fail, and new pricing power will be rebuilt. Stay rational, stay patient.

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

This does not constitute investment advice, DYOR.