2026 Outlook: These six structural forces are paving the way for the next cycle

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Original Title: Road to 2026: 6 Trends Shaping Crypto

Original author: 0xJeff, AI investor

Original compilation: Dingdang, Odaily Planet Daily

The year 2025 is set to be a challenging one for the crypto industry—despite the current U.S. president's promise to make America the global center for crypto and AI, the crypto market this year remains quite difficult.

Since Trump officially took office in January, the market has experienced moments of pressure time and again, the most fatal of which was the flash crash in October - that plunge nearly paralyzed the entire cryptocurrency industry.

Although the chain reaction of this flash crash has not yet fully resolved, the macro background and industry tailwind factors are pointing towards a more positive quarter and a more optimistic outlook for 2026.

This article will deeply analyze 6 trends that are reshaping the crypto industry behind the scenes, providing you with an early preview of what the landscape might look like in 2026. Let's get started.

1. Prediction Market = Crypto Version of Options Product Finding PMF

The prediction market (PM) has recently made breakthroughs at the industry level, with its weekly nominal transaction volume reaching a new historical high of 3 billion dollars for the first time two weeks ago.

We see the rapid expansion of market types - politics, sports, e-sports, pop culture, mention-type markets, macroeconomics, cryptocurrency, finance, financial reports, technology, and so on, blossoming everywhere.

@Polymarket and @Kalshi are developing in the direction of “everything can be predicted,” covering all popular topics; meanwhile, emerging PM projects like @trylimitless and @opinionlabsxyz are digging deep into vertical niches—Opinion focuses on pure macro markets, providing forecasts for economic indicators such as interest rates in the US, EU, and Japan; Limitless focuses on crypto assets, offering a wider range of currencies and richer time frames for the market.

Crypto options were all the rage during the bull market of 2021, but then they declined due to multiple issues, the most critical being poor UI/UX and a lack of liquidity.

Prediction markets perfectly complement the shortcomings of options. They provide an extremely user-friendly interface that allows anyone without any financial knowledge to bet on any event; at the same time, by creating interesting markets to attract user participation, anyone can get involved and become a market maker and trader (betting on both “yes” and “no”). Instead of understanding a bunch of Greek letters and complex terminology, you only need to buy shares of Yes or No.

Similar to options, users can also hedge their asset exposure using prediction markets.

For example:

· Did you receive a large airdrop but want to hedge early? Go buy No in this market.

· Is your portfolio's long exposure too large? Go buy No in the macro or BTC market.

You know.

Prediction markets are essentially repackaging options into a more mainstream product that everyone can participate in and profit from, with one of the biggest beneficiaries being the machine learning/prediction teams.

2. Prediction Market = The Perfect Testing Ground for Machine Learning Teams

More and more teams are increasing their investment in prediction markets, refining their signals and models, such as: @sportstensor, @SynthdataCo, @sire_agent, @AskBillyBets, etc.

Sportstensor is the liquidity provider layer of Polymarket, where any PM trader can participate in signal competitions. The best-performing signals can earn Alpha token incentives, and these signals will also feedback to Sportstensor to further enhance its prediction model for future profits.

Synth follows the route of a “high-frequency hedge fund” in the prediction market, using its own signals to predict the prices of cryptocurrency assets for 1 hour and 24 hours, and placing bets in the prediction market. Current preliminary results show - growing from 3000 USD to 15000 USD in one month, a return of 500%.

Sire is building an Alpha Vault that utilizes Sire's model and SN44 Score data for sports predictions, with current preliminary results exceeding 600% PnL. It is the best prediction market DeFi vault product currently prepared for public release.

Billy provides analysis and automated betting tools, utilizing the team's sports betting insights (BCS). They are looking for their advantages in Kalshi's parlays market and plan to expand their strategy and treasury size (future profits will be returned to token holders after the treasury size reaches a threshold).

The charm of prediction markets lies in their natural cultivation of multiple scenarios resembling a “Darwinian AI competition,” where ML teams can prove their strategies in a real market environment.

Synth, Sire, and Billy can all participate in the Sportstensor competition, and soon they will also be able to take part in the War of Markets planned by @aion5100 and @futuredotfun, which will be launched on Polymarket and Kalshi.

Even cooler, Polymarket is about to launch the Poly token, and the new PM projects are also attracting liquidity and trading volume through token incentives. The machine learning team can find price discrepancies and perform arbitrage while also taking advantage of token incentives.

Does it remind you of the early days of Hyperliquid?

The same thing happened again, but this time it occurred in the prediction market, not in perpetual contracts.

3. The Neobank War Begins

We are seeing key changes: large Web2 startups and enterprises are launching L1/L2 and integrating stablecoin payment links to directly serve users. At the same time, crypto-native projects are also advancing towards real-world financial services.

Teams like @ether_fi, @useTria, @AviciMoney, @UR_global, etc., now offer non-custodial crypto spending cards, allowing users to spend on-chain assets in the real world.

In just one year, this market has transformed from a blue ocean into a crowded battlefield, with 20 to 30 heavyweight players competing for the same batch of cryptocurrency users.

The current differentiation mainly focuses on:

· Cashback / Rebate Rate: Tria has the highest cashback, but an annual fee is required.

· Exchange rates, transfer, ATM fees

· Benefits System (Travel, Hotel Levels, Airport Lounges, Events)

· Earn / DeFi integration (idle fund earnings, lending consumption): EtherFi is leading in this direction, providing high returns + lending consumption capabilities.

Nevertheless, most products have the same underlying structure. They rely on partner banks/issuers that hold Visa/Mastercard licenses, making them more like “user acquisition gateways” rather than true Neobanks.

Therefore:

· Compliance is managed by the cooperating banks, not by the project itself.

· The user's balance is only a virtual account, not a real bank account.

· The functionality usually stops at “crypto consumption,” lacking a complete fiat off-ramp or banking services.

Currently, everyone is subject to these restrictions, so the impact is not significant. However, as competition intensifies, whoever can become the “real bank” will possess a core advantage. Projects that can control their own compliance and regulatory systems will be able to provide real bank accounts, multi-currency deposit and withdrawal channels, and achieve seamless integration between cryptocurrency and traditional finance.

In this regard, UR (from the Mantle ecosystem) is a step ahead, currently operating under FINMA regulation, possessing Swiss banking authorization, supporting seven fiat currencies, and simultaneously supporting real-world and crypto financial services (such as transfers in seven different currencies through the traditional banking system).

4. The breakthrough applications in the crypto industry are clearer than ever.

· Trading

· Prediction

· DeFi Yield

· Stablecoin

· Asset Tokenization

We have come from CEX → spot DEX → perpetual DEX, all the way to the era of Hyperliquid.

The “super speculative Launchpad” wave led by Pumpdotfun has triggered the rise of numerous narrative-driven on-chain launch platforms.

The prediction market is developing rapidly, truly reaching mainstream users for the first time (we have never seen such viral spread since the NFT era, and this time people actually like the product).

DeFi has fully entered Wall Street in the areas of structured returns, interest products, stablecoins, RWA/DePIN, and asset tokenization. People realize that they can “own a part of the future” and earn returns on it (even using it as collateral to borrow money).

All key crypto applications are being further amplified: CEX is launching wallet super apps, such as Base App, Binance, OKX, etc., while other wallets are rapidly expanding capabilities, making it easier for ordinary users to get started.

ICO is making a comeback - Coinbase has launched the first Monad ICO, and other platforms (Legion, Kaito) are also growing rapidly.

5. Crypto AI finds PMF

Crypto AI was initially dominated by a bunch of AI meme coins and GPT shell projects that called themselves “AI Agents,” but now these noises have faded away.

Nowadays, blockchain payments and stablecoins are supporting automated transactions between agents; cryptographic technologies such as TEE and ZK, combined with token incentives and punishment mechanisms, make AI systems verifiable, controllable, and predictable.

Support layers (e.g., x402, ERC-8004, programmable wallets, billing frameworks, verifiable reasoning/computation) are laying the foundation for “seamless collaboration between AI and humans” (the infrastructure enables AI and humans to transact and collaborate seamlessly anytime and anywhere, providing protective mechanisms to prevent AI from going out of control).

At the same time, “Darwinian AI” is rising as a meta-layer competition, promoting agent evolution, optimizing signals, and improving performance through real incentives. The most successful use case so far remains trading and prediction signals, which highly aligns with the genetic makeup of the cryptocurrency industry.

More and more ecosystems are adopting this Darwinian model, using token incentives to attract developers, reward contributors, and subsidize research and development, driving higher quality AI products. Although still in its early stages, some subnets of the Bittensor ecosystem have already shown impressive performance.

Nevertheless, most Crypto AI project tokens have not synchronously reflected these advancements—many projects are still 30–90% lower than their TGE prices, even though they are delivering genuine infrastructure and real utility.

6. DeFi enters the era of “Dynamic DeFi”

DeFi has long been a cornerstone of the crypto industry, with a TVL exceeding $130 billion, covering DEX, lending, yield products, and stablecoins.

The advantages of DeFi lie in its programmability, verifiability, and high composability, with top protocols being the most resilient systems in the entire industry. However, the underlying mechanisms of DeFi have remained largely unchanged over the past five years, with centralized liquidity market making or lending mechanisms being relatively static.

But now imagine this: what if a new DeFi protocol could automatically leverage/unlever based on the predicted price of the underlying asset, automatically rebalance LP positions, and automatically enter and exit the market?

This is the beginning of the “Dynamic DeFi Era,” driven by AI and machine learning.

Machine Learning Enhanced DeFi

@AlloraNetwork is a core player, collaborating with top protocols to inject machine learning intelligence into traditional DeFi:

· Machine Learning Driven Centralized LP Strategy

· Dynamic Leverage Management

· Yield optimization based on forward-looking risk signals

These predictions and signals are generated by the Allora inference network, where AI/ML engineers can contribute models and earn token rewards through a Darwinian incentive mechanism, which rewards models with better performance.

AI-generated and AI-managed DeFi strategies

@gizatechxyz and @almanak are also promoting a new type of product:

· Giza is an AI asset manager that intelligently allocates funds across various DeFi protocols.

· Almanak allows AI agents to deploy tokenized strategy Vaults within minutes, making it both a fund allocator and a strategy creation platform. This enables Almanak to serve as a capital allocator (bringing TVL into DeFi projects) as well as a vault creation platform for fund managers.

With the deeper integration of TradFi and DeFi, machine learning enhances the core values and risk management of DeFi, and AI designs more complex strategies. We may see a faster expansion of DeFi by 2026, as a more intelligent, autonomous, and adaptive layer of internet finance is emerging.

What's next?

In 2026, we may witness the convergence of multiple narratives - Crypto, AI, DeFi, RWA, DePIN, robotics, etc., coming together to form an interoperable digital economy operated jointly by humans and agents.

· DeFi becomes dynamic

· AI drives DeFi to expand to more users

· Greater scale users for cryptocurrency payment links, stablecoins, and key applications.

· Neobank integrates Web2 and Web3

· The predicted market size continues to grow, and the machine learning team becomes a core component.

Natural selection accelerates, and only a few assets can truly appreciate.

Cryptocurrency projects are more likely to choose IPOs instead of ICOs to obtain liquidity, compliance, and scale through traditional capital markets.

The next round cycle = the deep integration cycle of TradFi and DeFi.