IOSG Founder: 2025 is the worst year for the crypto market, so what about 2026?

Author | IOSG Co-founder Jocy

This is a fundamental shift in market structure, while most people are still using the old cycle logic to view the new era.

Looking back at the 2025 crypto market, we see a paradigm shift from retail speculation to institutional allocation, with core data showing institutions holding 24% of positions and retail investors retreating by 66% — the 2025 crypto market turnover is complete. Forget about the four-year cycle; the institutional era of the crypto market has new rules! Let me use data and logic to dissect the truth behind this “worst year.”

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 pretty 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 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 isn’t just a change in participants; it’s a rewriting of the rules.

Supporting data: BlackRock 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 rose from 0.29 in 2024 to 0.5 in 2025.

Looking again at BlackRock and MicroStrategy’s aggressive strategies: BlackRock IBIT accounts for about 60% of the BTC ETF market share, with a holding of 800,000 BTC, 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 positions, professional hedge funds account for 41%, together nearly 98% — indicating that current institutional holdings are mainly these two types of professional investors, not including pensions, insurance companies, and more conservative institutions (which may still be on the sidelines 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 Fund (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 Bitcoin ETF products are being continuously integrated by major financial intermediaries. The question is: why are institutions building positions “at high levels”?

Because they are not looking at prices, but at cycles.

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

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

Unlike the single explosive distributions in 2013, 2017, and 2021, this time it’s multiple waves of continuous distribution. Over the past year, BTC has been sideways at high levels for a year, something never seen 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-value transaction volume (0-)) decreased by 66.38%, large transactions over $100K increased by 59.26%. River estimates that in 2025, retail net selling reached 247,000 BTC, about $1 billion USD. Retail is selling, institutions are buying.

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

Traditional cycle logic: retail frenzy → price surge → crash → restart. New cycle logic: institutions steadily allocate → volatility narrows → price center rises → structural upward trend. This explains why prices are sideways, but capital inflows continue.

Policy environment is the third dimension. The Trump administration’s policies in 2025 have already taken effect: crypto executive order $1000 1.23 signed (, strategic Bitcoin reserves $230 ~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 bonds (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 banking lobbies plan to invest ( billion+ to oppose crypto donation influence. Polls show 64% of crypto investors consider candidates’ crypto stance “very important.” Policy friendliness is unprecedented.

But there’s 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 opening question: why do I remain optimistic despite crypto “performing the worst” in 2025? Because the market is completing a “turnover”: from retail hands → institutional hands, from speculative chips → allocation chips, from short-term gambling → 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 )globally 134 companies hold 1.686 million BTC (, unprecedented policy window in the US, and initial institutional deployment.

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 in midterm 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 $1 : $87K-( range oscillation, institutions continue building positions; medium-term )2026 first half (: policy + institutional dual drivers, target $120K–$150K; long-term )second half 2026 $95K : increased volatility, watch election results and policy continuity.

Core judgment: this is not the cycle top, but the beginning 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, currently $87,000. Each cycle, participants are more professional, capital is 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 positions 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 demonstrate strong “HODL” resilience. 2025 appears to be the worst for crypto on the surface, but in reality: the largest supply turnover, strongest institutional willingness to allocate, clearest policy support, and most extensive infrastructure development. Price 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, improved ETF infrastructure and regulatory clarity lay the foundation for the next rally.

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

Data sources: CoinDesk, CryptoSlate, Glassnode, CoinShares, Farside Investors, Strategy official website, CME Group, Yahoo Finance

This does not constitute investment advice. DYOR