IOSG Founder: 2025 will be a dark year for the crypto market, so what about 2026?

Written by: Jocy, Co-Founder of IOSG

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

Looking back at the 2025 crypto market, we see a paradigm shift from retail speculation to institutional allocation, with core data showing 24% institutional holdings and 66% retail exit — — the 2025 crypto market turnover is complete. Forget 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, 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%. Looks bleak? Keep reading.

But if you only look at prices, you miss the most important signals. Although BTC is down 5.4% for the year, it hit a historical high of $126,080 during the period. More importantly: what happened as prices declined? In 2025, BTC ETF net inflows reached $250 billion USD, with total AUM hitting $114–120 billion, and institutional holdings accounting for 24%. Some are panicking, 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. 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 but a rewriting of the rules of the game.

Supporting data: BlackRock’s IBIT reached $500 billion AUM in 228 days, becoming the fastest-growing ETF in history. It now holds 780,000–800,000 BTC, surpassing MicroStrategy’s 670,000 BTC. BlackRock, Grayscale, and Fidelity together hold 89% of the total BTC ETF assets. 13F filings show 86% of institutional investors already hold or plan to allocate digital assets. The correlation between BTC and the S&P 500 increased from 0.29 in 2024 to 0.5 in 2025.

Looking further at BlackRock and MicroStrategy’s aggressive strategies: BlackRock IBIT accounts for about 60% of the BTC ETF market share, with 800,000 BTC holdings surpassing MicroStrategy’s 671,268 BTC. Institutional participation continues to rise: 13F filings show institutional holdings account for 24% of ETF total AUM (Q3 2025); more professional institutional investors make up 26.3%, up 5.2% from Q3; major asset management firms hold 57% of BTC ETF holdings, professional hedge funds account for 41%, together nearly 98% — — indicating that current institutional holdings are mainly these two types of professional investors, not including pension funds, insurance companies, and other more conservative institutions (which may still be observing or just starting to allocate); FBTC institutional holdings reach 33.9%.

Major institutional investors include Abu Dhabi Investment Council (ADIC), Mubadala sovereign wealth fund, CoinShares, Harvard University endowment (holding $116 million IBIT), among others. Large traditional brokerages and banks have also increased their Bitcoin ETF holdings. Wells Fargo reports holdings of $491 million, Morgan Stanley reports $724 million, JPMorgan reports $346 million. This shows that Bitcoin ETF products are being continuously integrated by major financial intermediaries. The question is: why are institutions continuing to build positions “at high levels”?

Because they are looking at the cycle, not the price

After March 2024, long-term holders ((LTH)) sold a total of about 1.4 million BTC, worth $121.17 billion. This is an unprecedented supply release. But the surprising part — — prices did not crash. Why? Because institutions and corporate treasuries absorbed this selling pressure.

Three waves of selling by long-term holders: from March 2024 to November 2025, long-term holders (LTH) sold approximately 1.4 million BTC (worth $121.17 billion). The first wave ((end of 2023 - early 2024)): ETF approval, BTC from $25K to $73K; second wave ((late 2024)): Trump’s election, BTC surges to $100K; third wave ((2025)): BTC remains above $100K for a long time.

Unlike the single explosive distributions in 2013, 2017, and 2021, this time is a multi-wave, sustained distribution. Over the past year, BTC has been sideways at high levels for a year, something that has never happened before. BTC that has not moved for over two years has decreased by 1.6 million coins (about $14 billion) since early 2024, but market absorption capacity has strengthened.

Meanwhile, what are retail investors doing? Active addresses continue to decline, Google searches for “Bitcoin” dropped to an 11-month low, small transactions ($0–$1 ) decreased by 66.38%, large transactions over $1000 million increased by 59.26%. River estimates that in 2025, retail net selling reached 247,000 BTC, approximately ( billion USD. Retail is selling, institutions are buying.

This leads to the second key judgment: current market is not at “bull market top,” but at “institutional accumulation phase”

Traditional cycle logic: retail enthusiasm → price surge → crash → restart. New cycle logic: institutions steadily allocate → volatility narrows → price center lifts → structural rise. This explains why prices are sideways but capital inflows continue.

Policy environment is the third dimension. The Trump administration’s policies in 2025 have been implemented: crypto executive order $230 1.23) signed, strategic Bitcoin reserves (~200,000 BTC), GENIUS Act stablecoin regulatory framework, SEC chair change (Atkins) appointed. Pending: Market structure legislation (77% probability to pass before 2027), stablecoin purchases of short-term US Treasuries (expected to grow tenfold in the next three years).

Potential impact of the 2026 midterm elections: 435 House seats and 33 Senate seats up for election. In 2024, 274 “pro-crypto” candidates were elected, but the banking lobby plans to invest ( billion+ to counteract crypto donations. Polls show 64% of crypto investors consider candidates’ crypto stance “very important.” Policy friendliness is unprecedented.

But there is a timing window issue: the 2026 midterms are in November. Historical pattern: “election-year policies first” → policies implemented intensively in the first half → wait for election results in the second half → volatility increases. So the investment logic should be: first half of 2026 = policy honeymoon + institutional deployment = optimistic; second half of 2026 = political uncertainty = increased volatility.

Why do I still remain optimistic despite crypto “performing the worst” in 2025?

Returning to the initial question: why do I remain optimistic despite crypto “performing the worst” in 2025? Because the market is completing a “turnover”: from retail to institutional hands, from speculative chips to allocation chips, from short-term gambling to long-term holding. This process will inevitably involve price adjustments and volatility.

How do institutional target prices look?

VanEck: $180,000; Standard Chartered: $175,000–$250,000;

Tom Lee: $150,000; Grayscale: new highs in the first half of 2026.

Not blind optimism, but based on: continuous ETF inflows, listed company treasuries increasing holdings ) across 134 companies holding 1.686 million BTC$1 , an unprecedented policy window in the US, and the beginning of institutional allocation.

Of course, risks still exist: macro factors like Federal Reserve policies, strong dollar; regulatory delays in market structure legislation; continued selling by LTH; political uncertainties from midterm election results. But the flip side of risk is opportunity. When everyone is bearish, it’s often the best time to position.

Final investment logic: short-term (3–6 months): $87K–( range oscillation, institutions continue building positions; mid-term )H1 2026$95K : policy + institutional dual drivers, target $120K–$150K; long-term (H2 2026): increased volatility, watch election results and policy continuity.

Core conclusion: this is not the cycle top, but the start of a new cycle

Why am I confident? Because history shows: 2013 retail-led, peak $1,100; 2017 ICO frenzy, peak $20,000; 2021 DeFi+NFT, peak $69,000; 2025 institutional entry, current $87,000. Each cycle, participants become more professional, capital larger, infrastructure more complete.

The “worst performance” in 2025 is essentially a transition: from the old world ( retail speculation) to the new world ( institutional allocation). Prices are the cost of transition, but the direction is already set. When giants like BlackRock, Fidelity, and sovereign funds are building on the left side, retail is still debating “Will it fall further?” That’s a cognitive gap.

Summary

In conclusion: 2025 marks the acceleration of institutionalization in the crypto market. Despite BTC’s negative annual return, ETF investors show strong “HODL” resilience. The surface appearance of the worst crypto year in 2025 actually reflects: the largest supply turnover, the strongest institutional willingness to allocate, the clearest policy support, and the broadest infrastructure development. Prices down 5%, but ETF inflows reach ( 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 for 2026 include: progress in market structure legislation, expansion possibilities of strategic Bitcoin reserves, and policy continuity after the midterm elections. In the long run, the improvement of ETF infrastructure and regulatory clarity will lay the foundation for the next rally.

When market structure undergoes a fundamental change, old valuation logic becomes invalid, and new pricing power is rebuilt. Stay rational, stay patient.