Crypto’s turbulent 2025 prompted heavy sell-offs, but Pantera expects markets to recover in 2026

Pantera Capital says 2025 was effectively a full-scale bear market for most crypto tokens, despite surface-level volatility suggesting a choppy year.

In its Navigating Crypto in 2026 outlook, the venture capital firm noted that non-bitcoin tokens have been in a sustained decline since December 2024, weighed down by weak value capture, slowing on-chain activity, and fading retail flows. Total market capitalization for tokens outside bitcoin (BTC $88,654), ethereum (ETH $2,942), and stablecoins fell roughly 44% from late-2024 highs through year-end.

The downturn pushed sentiment and leverage to levels historically associated with capitulation, when investors sell positions in panic to prevent further losses. While bitcoin ended the year down just 6%, most other tokens experienced steep declines: ETH fell about 11%, SOL dropped 34%, and the broader token universe slid nearly 60%, with the median token down roughly 79%. Pantera described 2025 as a narrow market where only a small fraction of tokens produced positive returns.

Price action was driven less by fundamentals than macro shocks, flows, and market structure, the firm said. The year saw repeated whipsaws tied to policy developments, tariffs, and shifting risk appetite, culminating in an October liquidation cascade that erased more than $20 billion in notional positions—exceeding losses from Terra/Luna and FTX.

Structural issues added pressure, with many governance tokens lacking clear legal claims to cash flows or residual value, helping digital asset equities outperform tokens. On-chain metrics also weakened in the second half, including transaction fees, application revenue, and active addresses, though stablecoin supply continued to expand.

Pantera said the duration of the drawdown mirrors prior crypto bear markets, potentially creating a more favorable backdrop for 2026 if fundamentals stabilize and market breadth returns beyond bitcoin. Rather than issuing price targets, the firm views 2026 as a capital-allocation shift, with bitcoin, stablecoin infrastructure, and equity-linked crypto exposure positioned to benefit first.

Pantera partner Paul Veradittakit said the next year will be defined by institutional adoption, with growth concentrated in real-world asset tokenization, AI-driven on-chain security, bank-backed stablecoins, prediction market consolidation, and a surge in crypto IPOs, rather than broad speculative rallies.