At the end of 2025, the cryptocurrency market concluded with a noticeable contrast: according to Coingecko data, the total market capitalization fell by 23.7% over the year, yet it still stood at approximately $3 trillion. The price curve and asset volume appeared misaligned. On one side was the "calm" following an exponential correction, while on the other, funds had not truly retreated. More strikingly, during this year, U.S. spot Bitcoin ETFs and various digital asset financial companies contributed nearly $44 billion in net spot demand, while the market capitalization related to mainstream dollar-pegged assets grew by 48.9% to $311 billion in 2025. It seemed that funds were expanding, yet this was not reflected in prices. As we entered 2026, multiple reports and viewpoints from Kraken, Coingecko, and BiyaPay were converging in one direction: the main stage of the market was no longer just about price and speculation, but was quietly shifting towards a deep evolution of infrastructure and institutional channels.
The Divergence Between Price Decline and $3 Trillion Market Cap
Looking back at 2025, Coingecko's annual data presented a picture of a "massive market still in decline." The total market cap shrank by 23.7% over the year but remained around $3 trillion, indicating that after several rounds of volatility, there was no large-scale exit of capital similar to the previous extreme bear market; rather, it was more a revaluation of prices than a collapse of the entire asset pool. In this context, Bitcoin's performance stood out sharply: according to a single source, Bitcoin's decline for the entire year of 2025 was about 6.4%, while gold recorded a strong increase of 62.6% during the same period, highlighting a stark contrast between the upward movement of traditional safe-haven assets and the correction of the leading cryptocurrency. The surge in gold prices represented a rekindling of traditional safe-haven demand amid macroeconomic uncertainty, inflation, and geopolitical risks, while the risk premium of crypto assets was significantly compressed. Kraken and other market reports emphasized that the price weakness was more a direct reflection of the macro environment and tightening global risk appetite, rather than a "collective failure" of the industry fundamentals. From on-chain capital retention, the expansion of related dollar-pegged assets, to the steady increase in institutional holdings, data pointed to one reality: the asset structure was being rearranged, but the underlying networks and markets had not experienced a systemic collapse.
ETFs and Institutions Accumulate $44 Billion
If the price curve caused hesitation, the flow of funds was more straightforward. Kraken's statistics showed that in 2025, U.S. spot Bitcoin ETFs and various digital asset financial companies collectively contributed nearly $44 billion in net spot demand, indicating that funds with long-term allocation attributes were continuously entering the market, rather than engaging in short-term speculative "quick in and out." Furthermore, the so-called digital asset financial companies had accumulated and held over 5% of the total supply of Bitcoin and Ethereum, corresponding to a market value of approximately $49.7 billion, with capital becoming more concentrated and long-term in nature within institutional hands. This holding pattern was reshaping the ownership structure of the crypto market. The contradiction was that institutional buying and price stagnation or even decline occurred on the same timeline. As retail investors gradually exited after significant volatility, the high-leverage derivatives heat of centralized exchanges cooled, and the "elasticity" of prices was weakened, making it difficult for single-direction buying to rapidly push prices higher as it had in the past. The entry of ETFs and institutions was more about filling the vacuum left by previous high-level exits, completing the transition of capital from highly dispersed to relatively concentrated, from short-term speculators to long-term holders, rather than immediately igniting a new price frenzy.
Bitcoin's Sentiment Barometer Status is Quietly Being Redefined
On the sentiment front, Bitcoin remained the most important "thermometer" of this market, but the path of temperature transmission had clearly changed. Thomas Perfumo, head of intelligence at Kraken, reminded us, “Bitcoin is still the primary indicator of risk sentiment, but demand, liquidity, and risk channels have changed.” In the past cycle, Bitcoin sentiment was often amplified through high-leverage contracts and centralized exchange order books, with changes in risk appetite quickly reflected in price and liquidation data. However, after 2025, spot ETFs and increasingly mature over-the-counter institutional services became important new entry points for demand, shifting the entry and exit of sentiment from the public, volatile high-leverage battleground to more closed and compliant institutional channels. Meanwhile, the correlation between Bitcoin and gold, as well as traditional stock markets, was also undergoing subtle changes. A single source indicated that in mid-2025, gold surged while Bitcoin slightly corrected, showing signs of weakening Bitcoin's price response to macro single events, with its correlation to traditional assets weakening at certain stages. The function of sentiment indicators thus became more complex: on one hand, Bitcoin's indication of risk appetite remained, but it was now mixed with more regulatory expectations, institutional asset allocation logic, and the rhythm of ETF subscriptions and redemptions, making it increasingly difficult to infer risk sentiment simply from "up or down," losing the linear and direct explanatory power it once had.
$86.2 Trillion in Perpetual Contract Transactions
Compared to the sluggish price movements, the data from the derivatives market in 2025 remained enormous. A single source indicated that centralized exchanges recorded approximately $86.2 trillion in transaction volume for perpetual contracts in 2025, setting a historical high. From a numerical perspective, speculation had never left; it had simply shifted towards shorter cycles and high-frequency trading. This high volume of contracts coexisting with weak spot prices reflects that leveraged funds were more frequently trading back and forth in a sideways and slowly declining channel, digesting volatility through long-short hedging and short-term swings, rather than collectively pushing spot prices to new highs as in the previous bull market. Kraken projected that as we look to 2026, the market focus would gradually shift from pure derivatives speculation driven by "trading for the sake of trading" to infrastructure development and more institutionally friendly product design, seeking the next phase of growth by improving the quality of real liquidity and asset pricing logic. In other words, while transaction volumes remained large, speculative trading itself would no longer be the main story; the performance of infrastructure, the depth of compliant channels, and new forms of asset services would be the true variables determining the valuation center after this structural adjustment.
In the Era of Deflation and AI Narratives
On the macro narrative level, 2026 was framed with a new context. BiyaPay extensively quoted the judgment of Ark Invest founder Cathie Wood in its market analysis—“2026 will usher in an AI-driven deflationary era, and Bitcoin may become a major beneficiary.” In this logic, artificial intelligence is seen as a long-term force for cost reduction and efficiency improvement, with inflationary pressures expected to ease, shifting the focus of asset repricing from "fighting inflation" to "sharing technological dividends." Against the backdrop of rising institutional holdings and the continuous expansion of digital asset financial companies, Bitcoin was repackaged as a dual bet on deflation expectations and technological cycles: on one hand, it was viewed as a hedge against potential deflationary backlash after a long period of monetary easing; on the other hand, it was categorized as a "technological asset," interconnected with long-cycle technology themes such as AI, computing, and data. The issue lies in the gap between the deflation narrative and price corrections, which also lays the groundwork for a prolonged game in 2026. The market needs time to test whether AI can truly change the cost and profit distribution structure at the macro level, and whether institutions are willing to continue investing more funds into a single asset like Bitcoin through ETFs and financial companies while this hypothesis has not been fully validated. The misalignment between sentiment, funds, and application landing could very well become the true source of tension in 2026.
From Market Retreat to the Evolution of Infrastructure Year
In summary, all the data from 2025—the price correction, the market cap maintaining around $3 trillion, and the 48.9% expansion of market cap related to dollar-pegged assets—together formed a clear signal: funds had not collectively exited but were being rearranged in terms of channels and holder structures. More incremental funds were flowing in through institutional channels such as spot ETFs and digital asset financial companies, gradually raising the "water level" of crypto assets in these more regulated pools with longer decision-making cycles, with retail investors and high-leverage contracts no longer controlling the main direction of the market. Looking ahead to 2026, if infrastructure development and compliance processes can continue to progress at the existing pace, the market may slowly transition from a phase driven by high volatility and short-term narratives to one centered on long-term valuation reassessment and structural optimization. This transformation is unlikely to happen overnight and will inevitably be highly uneven in terms of rhythm and profit distribution: institutions that first gain compliant channels, hold large amounts of capital, and have a say in infrastructure may lock in a new round of valuation premiums ahead of others, while ordinary investors will still face a long period of turbulence and differentiation. Nevertheless, beneath the surface of "institutions buying continuously while prices fall," the crypto market is no longer just a simple extension of the previous cycle but is entering a profound structural rewrite.
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