This article is jointly published by K1 Research & Klein Labs

2025 Monthly Event Review Calendar source: Klein Labs

Looking back at 2025, this year was not simply a bull or bear market, but a re-positioning of the crypto industry within the multiple coordinates of politics, finance, and technology—laying the foundation for a more mature and institutionalized cycle in 2026.

Early in the year, Trump’s inauguration and the issuance of a digital asset strategic executive order significantly changed regulatory expectations. Meanwhile, $TRUMP token issuance brought cryptocurrencies into mainstream awareness, market risk appetite rapidly increased, Bitcoin broke through the $100,000 mark for the first time in history, completing its first leap from “speculative asset” to “political and macro asset.”

Subsequently, the market quickly faced the reality check. The decline of celebrity coins, the Ethereum “插针” incident, and Bybit’s epic hacking attack all exposed issues of high leverage, weak risk control, and narrative overextension. Between February and April, the crypto market gradually cooled from frenzy, resonating with macro tariff policies and traditional risk assets, prompting investors to reassess the importance of safety, liquidity, and fundamental value in asset pricing.

During this phase, Ethereum’s performance was particularly representative: ETH was under pressure relative to Bitcoin, but this weakening was not due to degradation at the technical or infrastructure level. On the contrary, in the first half of 2025, Ethereum continued to advance on key roadmap milestones such as gas limit, Blob capacity, node stability, zkEVM, PeerDAS, and others, steadily improving infrastructure capabilities. However, the market did not price in these long-term progressions accordingly.

Mid-year, structural recovery and institutionalization progressed in tandem. The Ethereum Pectra upgrade and the Bitcoin 2025 conference supported technological and narrative development, while Circle’s IPO marked the deep integration of stablecoins and compliant finance. The formal implementation of the GENIUS Act in July became the most symbolic turning point of the year—crypto industry’s first clear and systematic legislative endorsement in the US. Bitcoin hit a new high in this context. Meanwhile, on-chain derivatives platforms like Hyperliquid grew rapidly, and new forms such as stock tokenization and Equity Perps began to enter the market.

In the second half of the year, capital and narratives diverged clearly. ETF approvals accelerated, pension fund entry expectations grew, and the rate cut cycle began, collectively boosting mainstream asset valuations. Meanwhile, celebrity coins, Meme tokens, and high-leverage structures experienced frequent liquidations. The large-scale liquidation event in October became a concentrated reflection of risk release for the year. At the same time, the privacy sector staged a phase resurgence, with new narratives like AI payments and Perp DEX quietly forming in specific segments.

By year-end, the market closed with high-level declines and low liquidity. Bitcoin fell below $90,000, while traditional safe-haven assets like gold and silver performed strongly, indicating that the crypto market had become deeply embedded in the global asset allocation system. At this point, mainstream crypto assets entered a phased bottoming zone: in 2026, will the market rebound following the traditional four-year cycle and then enter a bear phase, or will institutional inflows and regulatory improvements break the cycle and push new highs? This will be the core research question for the next stage.

Macroe Environment and Policy: Structural Changes in 2025

1. Policy Shift: How 2025 Differs from Past Cycles

Reviewing past crypto cycles, policy and regulation have always been key external variables influencing market expectations. However, their mode of influence changed fundamentally in 2025. Unlike the permissive growth of 2017, the relaxed stance of 2021, or the comprehensive suppression from 2022 to 2024, 2025 presents a systemic shift from suppression to allowance, from ambiguity to regulation.

In previous cycles, regulation often intervened negatively: either through bans, investigations, or enforcement at market peaks to curb risk appetite, or through accountability measures during bear markets to release uncertainty. Under this model, policies often failed to effectively protect investors or provide long-term industry prospects, instead exacerbating cyclical volatility. In 2025, this governance approach began to change structurally: executive orders led the way, regulatory agencies aligned their rhetoric, and legislative frameworks gradually advanced—replacing the previous case-by-case enforcement model.

Crypto Regulation Development Map source: Messari

In this process, ETF approvals and stablecoin legislation played a key “expectation anchoring” role. The approval of spot ETFs allowed Bitcoin, Ethereum, and other crypto assets to access traditional financial systems with compliant channels for long-term capital allocation; by the end of 2025, the scale of Bitcoin and Ethereum-related ETP/ETF products reached hundreds of billions of dollars, becoming the main institutional vehicle for regulated crypto asset allocation. Meanwhile, legislation related to stablecoins (such as the GENIUS Act) clarified the layered structure of crypto assets: which possess “financial infrastructure attributes” and which remain high-risk speculative instruments. This delineation broke the blanket valuation of “crypto as a whole,” encouraging market differentiation among assets and sectors.

It’s important to note that the policy environment in 2025 did not generate a “policy dividend explosion” similar to previous cycles. Instead, its greater significance lies in providing a relatively clear lower bound: defining permissible behaviors and distinguishing assets with long-term viability from those destined to be marginalized. Under this framework, policy’s role shifted from “driving market rallies” to “risk constraint,” from “creating volatility” to “stabilizing expectations.” From this perspective, the policy shift in 2025 is not a direct engine of a bull market but a systemic foundation.

2. Capital First: Stablecoins, RWA, ETFs, and DAT as “Low-Risk Channels”

In 2025, an counterintuitive but crucial phenomenon became increasingly clear: capital did not disappear, but prices did not respond accordingly. Stablecoin market cap and on-chain transfer volumes remained high, spot ETF inflows persisted across multiple periods, yet most altcoins, aside from a few mainstream assets, remained under pressure. The divergence between capital activity and price performance is the core insight for understanding the 2025 market structure.

Stablecoins played a role entirely different from previous cycles. Historically, stablecoins were seen mainly as “intermediary currencies” within exchanges or leverage fuel during bull markets, with growth closely tied to speculative activity. In 2025, stablecoins evolved into tools for capital retention and settlement. The total stablecoin market cap grew from about $200 billion at the start of the year to over $300 billion by year-end, with an increase of nearly $100 billion, while the overall market cap of altcoins did not expand proportionally. Meanwhile, the annual on-chain settlement volume of stablecoins reached trillions of dollars, even surpassing the nominal annual transaction volume of traditional card networks. This indicates that in 2025, stablecoin growth was driven mainly by payment, settlement, and capital management needs, rather than speculation.

The development of RWA further reinforced this trend. In 2025, the actual RWA implementations mainly involved low-risk assets such as government bonds, money market funds, and short-term notes. Their core significance was not to create new price elasticity but to verify the feasibility of compliant assets existing on-chain. On-chain data shows that RWA protocol TVL accelerated from 2024 and continued upward in 2025—by October 2025, RWA protocol TVL approached $18 billion, several times higher than early 2024.

Although this scale is still insufficient to directly influence crypto prices at a macro capital level, its structural impact is clear: RWA provides near-riskless yield options for on-chain capital, enabling some funds to “stay on-chain but avoid crypto price volatility.” In a context of attractive interest rates and gradually clarified regulation, this choice marginally weakens the traditional positive correlation between on-chain activity and token prices, further explaining the 2025 “capital growth but price elasticity decline” structural feature.

The impact of ETFs is more about capital stratification than broad diffusion. Spot ETFs offer compliant, low-friction channels for mainstream assets like Bitcoin and Ethereum, but this capital entry path is highly selective. As of early 2026, top-tier BTC/ETH spot ETFs hold over 6%/4% of the total circulating supply of these tokens, forming a clear institutional capital absorption in mainstream assets. However, this incremental capital has not spilled over into a broader asset hierarchy. During ETF promotion, Bitcoin dominance (the proportion of Bitcoin market cap in total crypto market cap) did not experience the rapid decline typical of previous bull markets; instead, it remained high, reflecting that institutional capital has not significantly flowed into long-tail assets (tokens ranked outside the top 100). As a result, ETFs reinforce the capital absorption capacity of leading assets but also deepen the internal structural differentiation of the market.

Similarly, the rapid rise of “Coin-Stock Companies” DAT (Digital Asset Treasury Companies) in 2025 deserves attention: listed companies include BTC, ETH, and even SOL on their balance sheets, and through issuance, convertible bonds, buybacks, and collateralized yields, they turn stocks into “financable, leveraged crypto exposure vehicles.” Nearly 200 companies have disclosed adopting similar DAT strategies, holding over $130 billion in digital assets. DAT has evolved from isolated cases into a traceable capital market structure. Its structural significance is similar to ETFs: it enhances the capital absorption of mainstream assets but with a more “equity-like” transmission mechanism—funds flow into stock valuations and financing cycles rather than directly into secondary liquidity of long-tail tokens, further exacerbating capital stratification between mainstream and alt assets.

Overall, the incremental capital in 2025 is not absent but systematically flows into “compliant, low-volatility, long-term holdable” channels.

3. Market Outcomes: Structural Stratification of Mainstream and Alt Markets

From the final price results, the 2025 crypto market exhibits a highly counterintuitive but logically consistent state: it did not collapse, but most projects continued to decline. According to Memento Research’s statistics on 118 token issuances in 2025, about 85% of tokens traded below their TGE (Token Generation Event) price, with median FDV (Fully Diluted Valuation) retracing over 70%. This performance did not significantly improve during subsequent recovery phases.

2025 Token Issuance Overview source: MEMENTO RESEARCH

This phenomenon is not limited to tail projects but covers most small- and mid-cap assets, including some projects with high initial valuations and market attention that still significantly underperformed Bitcoin and Ethereum. Notably, even when weighted by FDV, the overall performance remains strongly negative, indicating that projects with larger scale and higher issuance valuations tend to drag the market down more. This clearly shows that the issues in 2025 are not demand “disappearing,” but demand shifting direction.

With policy and regulation gradually clarified, the crypto market’s capital structure is changing, but this change is not yet enough to fully replace the short-term dominance of narratives and sentiment on prices. Compared to past cycles, long-term capital and institutional funds are increasingly selective, entering assets and channels with compliance attributes and deep liquidity—such as mainstream coins, ETFs, stablecoins, and some low-risk RWAs. These funds mainly serve as “underlying anchors,” not short-term price drivers.

Meanwhile, the main trading activity remains driven by high-frequency and sentiment, and token supply continues to follow the old issuance logic, expanding under the “bullish market” assumption. As a result, the anticipated systemic “altcoin season” has not materialized. New narratives, driven by sentiment, can generate short-term price feedback, but lack the capital support to cross cycle boundaries. Price declines tend to outpace narrative realization, leading to a stage and structural mismatch between supply and demand.

Under this dual structure, 2025 presents a new market state: at the macro cycle level, allocation logic shifts toward mainstream assets and assets with institutional capacity; at the short cycle level, crypto remains a narrative- and sentiment-driven trading market. Narratives are not invalid, but their scope is significantly compressed—they are more suitable for capturing sentiment swings rather than supporting long-term valuation.

Thus, 2025 is not the end of narrative-based pricing, but the beginning of narrative filtering by capital structure: prices will still react to stories and sentiment, but only assets capable of attracting long-term capital after volatility can truly realize value accumulation. From this perspective, 2025 is more like a “transition period of pricing power” rather than an endpoint.

Industry and Narratives: Key Directions Under Structural Stratification

1. Tokens with Genuine Yield: Tracks Leading the Adaptation to Capital Structure Changes

1.1 2025 Review: Yield-Generating Assets as Capital Absorbers

In a context where narratives still dominate short-term prices but long-term capital begins to set entry thresholds, tokens with genuine yields were the first to adapt to the changing capital structure. This sector’s relative resilience in 2025 is not because its narrative is more attractive, but because it offers a participation path that does not rely on continuous sentiment-driven upward movement—holding these assets still provides clear returns even if prices stagnate. This shift was first evidenced by the market’s acceptance of yield-bearing stablecoins. USDe, for example, does not depend on complex narratives but quickly gained recognition due to its transparent, explainable yield structure. In 2025, USDe’s market cap briefly surpassed $10 billion, becoming the third-largest stablecoin after USDT and USDC, with growth rates and scale significantly outpacing most risk assets at the same time. This indicates that some capital now views stablecoins as cash management tools rather than mere trading intermediaries, especially in a high-interest-rate and increasingly regulated environment, leading to long-term on-chain holdings. Its pricing logic shifted from “narrative elasticity” to “real, sustainable yield.” This does not mean the crypto market has fully entered a cash flow valuation phase, but clearly shows that when narrative space is compressed, capital prefers assets that can stand on their own without storytelling.

1.2 Outlook for 2026: Capital Will Further Concentrate on Core Value Assets

When markets enter rapid decline or liquidity contraction phases, the “assets worth watching” are not defined by their narratives but by their resilience—specifically, whether their protocols can continue generating fees/revenue in low-risk environments, and whether these revenues can support tokens through buybacks, burns, fee switches, or staking yields. Assets like BNB, SKY, HYPE, PUMP, ASTER, RAY, which have more direct value capture mechanisms, tend to be the first choice for capital during panic. Conversely, assets like ENA, PENDLE, ONDO, VIRTUAL, with clearer functional positioning but more differentiated value capture and stability, are better suited for structural selection during emotional recovery after declines: those that can convert functional use into sustained income and verifiable token backing qualify to advance from “trading narratives” to “configurable assets.”

DePIN (Decentralized Physical Infrastructure Networks) extends the logic of genuine yield into a longer-term dimension. Unlike yield-bearing stablecoins and mature DeFi, DePIN’s core is not financial structure but whether tokenized incentives can transform highly capital-intensive or low-efficiency infrastructure needs in the real world into sustainable distributed supply networks. In 2025, the market has completed initial screening: projects that cannot demonstrate cost advantages or rely heavily on subsidies quickly lose patience; those that connect to real needs (computing power, storage, communication, AI inference, etc.) are beginning to be viewed as potential “income-generating infrastructure.” Currently, DePIN is more like a direction under continuous observation, especially in the context of accelerating AI demand, but has not yet been fully priced. Its ability to enter mainstream valuation in 2026 depends on whether real needs can be scaled into sustainable on-chain revenue.

Overall, tokens with genuine yields are the first to be retained because they meet a very practical condition: they give capital a reason to stay without relying on continuous price appreciation. This also makes the key question for this sector in 2026 not whether there is narrative, but whether, after scaling, the yields still hold.

2. AI and Robotics × Crypto: Key Variables for Productivity Revolution

2.1 2025 Review: AI and Robotics × Crypto Narrative Cooling

If any sector in 2025 “failed” in price terms but became more important in the long run, AI and Robotics × Crypto are the most typical examples. Over the past year, DeAI investment enthusiasm in primary and secondary markets cooled significantly compared to 2024, with related tokens underperforming mainstream assets and narrative premiums being rapidly compressed. But this cooling is not because the direction itself failed; rather, because the productivity transformation brought by AI manifests more in systemic efficiency improvements, causing a phase mismatch with crypto market pricing mechanisms.

Between 2024 and 2025, internal structural changes occurred within the AI industry: reasoning demand rose sharply relative to training demand, post-training and data quality became more important, open-source models faced intensified competition, and agent economies moved from concept to practical application. These changes point to a fact—AI is transitioning from “model capability race” to a “system engineering” stage involving compute, data, collaboration, and settlement efficiency. These are precisely areas where blockchain can play a long-term role: decentralized compute and data markets, composable incentive mechanisms, and native value settlement and access control.

2.2 Outlook for 2026: Productivity Revolution as the Key to Narrative Upper Limit

Looking ahead to 2026, the significance of AI × Crypto is shifting. It is no longer a short-term narrative of “AI project issuing tokens,” but a complementary infrastructure and coordination tool for the AI industry. Robotics × Crypto is similar; its real value is not in the robots themselves but in how identity, permissions, incentives, and settlement are automated in multi-agent systems. As AI agents and robotic systems gradually gain autonomous execution and collaboration capabilities, traditional centralized systems face friction in permission allocation and cross-entity settlement, and blockchain mechanisms offer a potential solution.

However, this sector did not receive systematic valuation in 2025, mainly because its productivity value takes a long time to realize. Unlike DeFi or trading protocols, the commercial closed-loop of AI and Robotics is not yet fully formed. Real needs are growing but difficult to convert into scalable, predictable on-chain revenue in the short term. Therefore, in the current “narrative compression, capital prefers receivable assets” market structure, AI × Crypto is more like a continuously tracked but not yet mainstream allocated direction.

AI, Robotics × Crypto should be understood as a layered narrative: in the long term, DeAI is a potential infrastructure for productivity change; in the medium and short term, protocol-level innovations like x402 may become highly elastic narratives repeatedly validated by sentiment and capital. The core value of this sector is not whether it is immediately priced but that once it enters a valuation range, its upside potential exceeds traditional application narratives.

3. Prediction Markets and Perp DEX: How Regulation and Technology Reshape Speculative Demand

3.1 2025 Review: Stable and Steady Speculative Demand

In a context of narrative compression and cautious long-term capital, prediction markets and decentralized perpetual contracts (Perp DEX) became among the few sectors to grow against the trend in 2025. Their reason is simple: they fulfill the most fundamental and hardest-to-eliminate demand in crypto—pricing uncertainty and leverage trading. Unlike most application narratives, these products do not create new demand but migrate existing demand.

Prediction markets aggregate information, with capital betting on future events, and prices gradually converge toward collective consensus. Structurally, they resemble a “gambling” form that is relatively more compliant: no house controlling odds, outcomes determined by real-world events, and platforms earning fees. Their first high-profile appearance was during the US presidential election. Prediction markets around election results rapidly gathered liquidity and public attention, elevating from niche DeFi products to influential narrative directions. In 2025, this narrative persisted and even intensified with infrastructure maturity and protocol token issuance expectations. Data shows that in 2025, prediction markets’ total trading volume exceeded $2.4 billion, with open interest around $270 million, indicating real capital is continuously bearing event risk, not just short-term flow.

Perp DEX’s rise more directly points to the core product form of crypto—contract trading. Its significance is not whether on-chain is faster than off-chain, but whether it introduces a verifiable, settlement-capable, trustless environment to replace opaque, counterparty-risky contract markets. Transparent positions, liquidation rules, and liquidity pools give Perp DEX different safety attributes from centralized exchanges. However, it must be acknowledged that in 2025, most contract trading volume still concentrated on CEXs, not due to trust issues but because of efficiency and user experience.

3.2 Outlook for 2026: Institutional and Technological Factors Decide Cross-Cycle Viability

Looking ahead to 2026, collaborations like Polymarket and Parcl launching real estate prediction markets could reach broader non-crypto audiences, becoming breakout applications. The World Cup, as a globally natural betting event, could also become a new traffic peak for prediction markets. More importantly, infrastructure maturity—such as liquidity depth, market-making mechanisms, cross-event capital reuse, and large order capacity—along with dispute resolution mechanisms, will determine whether prediction markets evolve from “event-based gambling” to a long-term macro, political, financial, and social uncertainty pricing infrastructure. If these conditions mature, the upper limit of prediction markets will not only be short-term traffic but whether they can become one of the few core applications with cross-cycle resilience in crypto.

Perp DEX’s continued expansion depends less on “decentralization” and more on whether it can provide incremental value on the demand side that centralized platforms cannot. For example, improving capital efficiency: by integrating unused contract margins with DeFi protocols, enabling participation in lending, market-making, or yield strategies without significantly increasing liquidation risk, thus boosting overall capital utilization. If Perp DEX can further unlock such structural innovations on a secure, transparent basis, its competitiveness will no longer be just “safer,” but “more efficient.”

From a macro perspective, prediction markets and Perp DEX share a common trait: they do not rely on long-term narrative premiums but on repeatable, scalable speculative and trading demand. In an environment where narratives are filtered and altcoin seasons are absent, these sectors are more likely to sustain attention. They may not be the first choice for long-term capital allocation but are highly likely to become the core stages where sentiment, trading, and technological innovation intersect repeatedly in 2026.

Summary

Looking at the big picture, 2025 is not a “failed bull market,” but a deep restructuring of crypto market pricing power, participant structure, and value sources. On the policy level, regulation shifted from high uncertainty suppression to clear boundary and function delineation; on capital, long-term funds did not directly flow back into high-volatility assets but first established compliant, auditable, low-volatility channels through ETFs, DAT, stablecoins, and low-risk RWAs; on the market, the price mechanism fundamentally changed, with narrative-driven expansion no longer automatically triggering linear upside, and the “altcoin season” gradually fading, replaced by structural differentiation.

But this does not mean narratives have exited the market. On the contrary, in shorter timeframes and more segmented sectors, narratives and sentiment remain the most important trading drivers. The resurgence of prediction markets, Perp DEX, AI payments, Meme tokens, and others indicates that crypto remains a highly speculative, decentralized arena of information and risk. The difference is that these narratives are increasingly difficult to turn into long-term valuation foundations; they are more like phase opportunities that are continuously filtered, rapidly validated, and quickly cleared based on real usage, trading needs, or risk expression.

Therefore, entering 2026, a more pragmatic and operational framework is taking shape: at the macro cycle level, the market will continue to concentrate on mainstream assets and infrastructure with real utility, distribution, and institutional capacity; at the micro cycle level, narratives still matter but are no longer to be blindly trusted. For investors, the key is no longer betting on “the next full bull,” but rather making more pragmatic judgments about which assets and sectors can survive in an environment of shrinking markets, regulatory constraints, and increasing competition, and which can first gain elasticity and pricing power when sentiment and risk appetite rebound.