The year 2025 marks the inflection point for cryptocurrencies, according to Pantera Capital

The cryptocurrency industry experienced a tumultuous year of 2025 on the surface, but with a deep underlying phenomenon: most alternative tokens have remained in a sustained bear market for over a year, reveals Pantera Capital in its retrospective analysis. What appeared to be traditional cycle volatility was, in fact, a significant structural correction that now sets the stage for 2026.

The Extreme Dispersion of the Year 2025: Bitcoin Resists, Altcoins Suffer Collapse

The year 2025 was characterized by an unprecedented dissociation among assets. While Bitcoin experienced a modest decline of approximately 13%, Ethereum fell 4%, and Solana contracted by 46%. However, the debacle was devastating across the broader universe of tokens: excluding BTC, ETH, and SOL, the median portfolio plummeted around 79%, with these assets losing nearly 60% of their value since the end of 2024.

The total market capitalization of crypto assets, excluding Bitcoin, Ethereum, and stablecoins, retreated approximately 44% from their all-time highs at the end of 2024 to the close of 2025. Pantera Capital describes this behavior as “extreme dispersion,” where only a small fraction of tokens generated positive returns, leaving most in negative territory.

Worsening Structural Problems: More Than Market Cycles

Pantera Capital identifies that the crisis of 2025 was not merely cyclical but exposed structural vulnerabilities in the ecosystem. Macroeconomic shocks, accelerated deleveraging, and massive liquidations converged to create sustained pressure, but root problems go beyond that.

A central question arises regarding the value proposition of many tokens: most governance tokens lack clear legal claims on cash flows and residual value available to holders. This fundamental disconnect between issuance and value creation helped traditional digital assets outperform tokens throughout the year.

Additionally, on-chain fundamentals weakened in the second half of 2025. Network fees, revenues from decentralized applications, and active addresses experienced notable contractions. Meanwhile, the supply of stablecoins continued its upward trajectory, creating a dynamic imbalance where liquidity did not translate into demand for altcoins.

The climax occurred in October 2025 with a cascade of liquidations that wiped out more than USD 20 billion in notional positions, surpassing the combined collapses of Terra/Luna and FTX.

From Panic to Capitulation: Signs of Exhaustion

By the end of 2025, sentiment indicators reached levels historically associated with market capitulation. Leverage was compressed to lows, and positioning reflected that most participants had already liquidated their speculative positions or dramatically adjusted their exposure.

Pantera Capital highlights a crucial parameter: the duration of this bear cycle now reflects the extent of previous bear markets in cryptocurrencies. This data is relevant because it suggests that the cycle has reached a phase comparable to historic inflection points, potentially paving the way for a recovery if fundamentals stabilize.

From Capitulation to Recovery: Perspectives for 2026

Unlike projecting specific price targets, Pantera Capital sees 2026 as a year of capital repositioning and narrative shift. The firm states that Bitcoin, stablecoin infrastructure, and crypto assets linked to traditional assets are positioned to capture the first flows if risk appetite returns.

Paul Veradittakit, a partner at Pantera, said that 2026 will be defined by accelerated institutional adoption, with an emphasis on tokenization of real-world assets, AI-driven security protocols, central bank-backed stablecoins, and consolidation in prediction markets. According to this perspective, broad speculative returns to altcoins will not be the dominant narrative.

Repositioning Strategy: Where Capital Flows

Pantera’s analysis suggests that 2026 will not be a simple rebound of 2025 but a reconfiguration where institutional capital seeks clear fundamentals and proven use cases. Governance tokens without mechanisms for capturing value will continue to face structural pressure.

Meanwhile, projects like Pudgy Penguins emerge as an example of industry evolution: migrating from speculative “digital luxury goods” to multi-vertical intellectual property platforms with physical products (over USD 13 million in retail sales), mass-adopted games, and tokenized distribution. This model reflects how some assets aim to build value beyond pure speculation.

XRP, meanwhile, has experienced interesting dynamics: although the price retreated in January, USD-denominated spot ETFs have attracted net inflows of USD 91.72 million, indicating that institutional interest persists even amid price volatility.

Conclusion: From Decline to Recalibration

The year 2025 was not just a bad year for cryptocurrencies; it was the accelerated manifestation of a bear market that began to take shape over a year ago. Pantera Capital suggests that this contraction, though painful, has created the necessary structural conditions for a potentially healthier market in 2026, provided fundamentals stabilize and market breadth expands beyond Bitcoin.