Institutional Dawn and the End of Cycles: Interpreting the Core Narratives and Divergences of Eight Major Crypto Institutions in 2026

Author: Bruce

Introduction: From "Wild West" to "Wall Street Branch"

The year 2026 may be recorded as a watershed moment in the history of cryptocurrency. If previous bull and bear cycles were dominated by retail sentiment and the Bitcoin halving mechanism in a "Wild West" narrative, the latest research reports from the eight leading crypto institutions point to a new narrative—the formal establishment of the institutional era.

Fidelity bluntly states in its report that the market is entering a "New Paradigm." With sovereign nations' reserves (such as legislative attempts in Brazil and Kyrgyzstan) and the entry of traditional wealth management institutions, the "four-year cycle theory" based solely on historical data is becoming obsolete. This article will strip away market noise and deeply analyze the certain opportunities and potential risks as seen by these top institutions.

I. Macroeconomic Tuning: The Demise of the Four-Year Cycle and New Asset Attributes

For a long time, the crypto market has been accustomed to linear extrapolation around Bitcoin's four-year halving cycle. However, this logic faced a collective "dimensionality reduction" in the outlook for 2026.

1. Broken Cycle

Bitwise, Fidelity, and Grayscale have reached a consensus: the halving effect is diminishing marginally.

21Shares even used explicit wording—"the four-year cycle of Bitcoin has been broken." Their data model shows that the introduction of ETFs fundamentally changed the demand structure, with market drivers shifting from the supply side (miner halving) to the demand side (institutional allocation). When BlackRock and Fidelity's clients begin to allocate BTC quarterly, the four-year halving story loses its allure.

2. Asset Maturity: Desensitization of Volatility

• Bitwise's Bold Quantification: Bitwise made a striking prediction—by 2026, Bitcoin's volatility will fall below that of Nvidia for the first time. This is not just a numerical game but signifies Bitcoin's transformation from a "high-beta tech stock" to a "mature safe-haven asset."

• Fidelity's Qualitative Insight: Although no specific numbers were provided, Fidelity emphasized that against the backdrop of high global debt and fiat currency devaluation, Bitcoin will decouple from its tech stock correlation and become an independent hedge against currency inflation globally.

II. High-Confidence Narrative: Where is the Money Flowing?

After eliminating cyclical interference, institutions, despite differing details, show a high degree of overlap in the logic of capital flow.

1. Stablecoins: Challenging Traditional Financial Infrastructure (ACH)

If Bitcoin is digital gold, stablecoins are digital dollars. Several institutions believe that stablecoins will no longer be confined to the crypto sphere but will directly challenge traditional financial pipelines.

• 21Shares Prediction: The total market cap of stablecoins will exceed $1 trillion by 2026.

• Galaxy Digital Prediction: The on-chain transaction volume of stablecoins will officially surpass the ACH (Automated Clearing House) network in the U.S. This means stablecoins will replace traditional interbank clearing systems, becoming a more efficient highway for funds.

• Coinbase Outlook: Predicts that by 2028, the market cap of stablecoins will reach $1.2 trillion.

• a16z Perspective: Stablecoins are evolving into the "base settlement layer" of the internet, fostering the prosperity of PayFi (Payment Finance), making cross-border payments as cheap and instant as sending emails.

2. AI Payments and KYA: A New Commercial Civilization

This is the biggest technological variable favored by a16z and Coinbase, both depicting the same picture from different angles.

• Google AP2 and Coinbase x402: Coinbase's report highlights Google's Agentic Payments Protocol (AP2) standard and notes that its developed x402 protocol will serve as a payment extension for AP2. This enables AI agents to conduct instant micropayments directly via HTTP protocol (HTTP Payment Required), closing the business loop between AIs.

• From KYC to KYA: a16z creatively introduced the concept of "KYA" (Know Your Agent). They pointed out that among the current on-chain transaction entities, the ratio of "non-human" to "human" has reached 96:1. Traditional KYC (Know Your Customer) will evolve into KYA. AI agents do not have bank accounts but can own crypto wallets, tirelessly purchasing data, computing power, and storage through micropayments 24/7.

3. Prediction Markets: A New Vehicle for Information Freedom

This is a true "institutional consensus track," with multiple institutions listing it as a breakout point for 2026.

• Bitwise: Predicts that the open interest in decentralized prediction markets (like Polymarket) will reach an all-time high, becoming a "source of truth" parallel to traditional news media.

• 21Shares: Provided specific numbers, predicting that the annual trading volume of prediction markets will exceed $100 billion.

• Coinbase's "Tax-Driven Theory": Proposed a very unique perspective—the new U.S. tax law (restricting gambling loss deductions) will inadvertently push users toward prediction markets. This is because prediction markets may be classified as "derivatives" rather than "gambling" for tax purposes, thus having a tax advantage.

III. Key Divergences: Alpha Often Exists in Controversy

Consensus often means that prices have been priced in, while divergences indicate excess returns (Alpha) or potential risks.

1. "Cleansing" of Digital Asset Treasuries (DAT) vs. "Red Herring"

Regarding MicroStrategy's "public company coin hoarding" model, institutional views are polarized.

• Cleansing Faction (Galaxy Digital & 21Shares):

• 21Shares predicts that the total scale of DAT will increase to $250 billion but emphasizes that "only a few will survive." Small DAT companies trading below net asset value (NAV) for an extended period will be forced to liquidate.

• Galaxy Digital specifically predicts: "At least 5 DAT companies will be forced to sell assets, be acquired, or go bankrupt." They believe that the blind following in 2025 led to many companies entering without capital strategies, and 2026 will be the "clearing moment" for the market.

• Dismissive Faction (Grayscale):

• Continues to maintain its "Red Herring" viewpoint, believing that while DAT has significant media attention, it will not become a core driver of market pricing in 2026 due to accounting standards and the disappearance of premiums.

2. Quantum Computing: Needs Attention vs. Overblown Fears

• Cautionary Faction (Coinbase): Specifically opened a chapter in the report titled "The Quantum Threat," warning that it is now necessary to initiate the migration to post-quantum cryptographic standards, while the underlying signature algorithms must begin upgrading to quantum-resistant solutions, which is essential for infrastructure security.

• Calm Faction (Grayscale): Lists the "quantum threat" as a "Red Herring." They believe that within the investment cycle of 2026, the likelihood of quantum computers breaking elliptic curve encryption is zero, and investors should not pay a "panic premium" for this.

3. The "Cleansing" of L2 (The Zombie Chain Apocalypse)

This is one of 21Shares's sharpest predictions. They believe that the vast majority of Ethereum Layer 2 will not survive past 2026, becoming "Zombie Chains."

• Reason: Liquidity and developer resources exhibit a strong Matthew effect, ultimately concentrating towards the leading chains (like Base, Arbitrum, Optimism) and high-performance chains (like Solana).

• Data Evidence: Galaxy Digital predicts that "the ratio of application layer revenue to L1/L2 network layer revenue will double by 2026," validating the "Fat App Thesis"—value is flowing from the infrastructure layer to super applications with real users.

IV. Non-Consensus Predictions: Overlooked Corners

In addition to the mainstream views mentioned above, some institutions have proposed unique "niche" predictions worth noting:

• Return of the Privacy Track (Galaxy Digital & Grayscale): Both Galaxy Digital and Grayscale are optimistic about the privacy track, with Galaxy Digital predicting that the total market cap of privacy tokens will exceed $100 billion. They also specifically mentioned the rebound of Zcash ($ZEC), believing that privacy will be repriced from a "tool for crime" to an "institutional necessity" (Privacy as a Service).

• Revival of Compliant ICOs (21Shares): 21Shares believes that with the establishment of regulatory frameworks (such as the U.S. Digital Asset Market Clarity Act), "regulated ICOs" will return as a legitimate capital market financing tool.

• Excess Returns of Crypto Stocks (Bitwise): Predicts that crypto-related stocks (such as mining companies, Coinbase, Galaxy) will outperform the traditional tech giants (Magnificent 7).

Conclusion: Survival Rules for Investors in 2026

In summary of the outlook from the eight institutions, the market logic for 2026 has fundamentally changed. The simple model of "buying with closed eyes and waiting for the halving" is a thing of the past.

For investors, the new survival rules can be summarized in three dimensions:

1. Embrace Leaders and Real Returns: In the brutal cleansing of L2 and DAT, liquidity and capital structure are survival indicators; focus on protocols that can generate positive cash flow.

2. Understand "Tech-Weighted": From the Google AP2 standard to KYA, upgrades in technological infrastructure will bring new Alpha, with a focus on the implementation of new protocols like x402.

3. Beware of False Narratives: In the eyes of institutions, there are not only golden opportunities but also "red herrings." Distinguishing between long-term trends (such as stablecoins replacing ACH) and short-term speculation will be key to success in 2026.

(This article represents the author's analytical views based on institutional reports and does not constitute any investment advice.)