Pantera Capital indicates that the 2025 crypto market is setting the stage for a rebound in 2026

Pantera Capital, the investment firm, has published a detailed analysis of the cryptocurrency market performance during 2025, concluding that most digital assets experienced a significant scale decline that, paradoxically, could set the conditions for a more robust recovery in 2026.

According to Pantera, what many observers characterized as a turbulent year in the crypto industry was, in fact, a sustained bear market that dates back over a year, especially for tokens that are not bitcoin or ethereum.

The Extreme Dispersion That Defined 2025

The decline was not uniform. While bitcoin ended 2025 with a moderate retracement of approximately 6%, ethereum fell about 11%, and solana suffered a 34% drop. However, the outlook became catastrophic when looking at the broader universe of alternative assets. Tokens excluding bitcoin, ethereum, and solana experienced a collapse close to 60%, with the median token losing around 79% of its value since late 2024 highs.

The total market capitalization of cryptocurrencies, excluding the three mentioned assets and stablecoins, contracted approximately 44% from its peak to the end of last year. This extraordinary dispersion highlights a market moving at two speeds, where only a minimal fraction of tokens managed to generate positive returns.

Macroeconomic and Structural Factors Behind the Decline

Pantera Capital attributes the debacle mainly to three converging elements: macroeconomic shocks, accelerated unwinding of leverage, and fundamental questions about how value is accumulated in tokens.

During 2025, the industry faced persistent volatility linked to economic policy decisions, tariff threats, and fluctuations in global risk appetite. The culmination of these pressures materialized in October with a massive cascade of liquidations that wiped out more than $20 billion in positions, a figure even surpassing the historic collapses of Terra/Luna and FTX.

In parallel, Pantera identifies a deeper structural problem: governance tokens often lack clear mechanisms to claim cash flows or residual value, contrary to what happens in traditional stock markets. This deficiency partly explains why digital assets like companies outperformed the tokens themselves during the analyzed period.

On-chain indicators also showed weakening in the second half of the year, with declines in fees, application revenues, and active addresses, although the supply of stablecoins continued its upward trajectory.

Pantera’s Outlook for a Potential Recovery in 2026

Despite the bleak outlook, Pantera Capital notes an encouraging nuance: the duration of the current collapse now reflects previous historical bear cycles in cryptocurrencies, suggesting that the industry could be approaching an inflection point if fundamentals stabilize.

For 2026, Pantera does not offer speculative price targets but proposes a reorientation in capital allocation. The firm projects that bitcoin, stablecoin infrastructure, and crypto assets linked to equities would be the first to benefit if risk appetite returns and fundamentals solidify.

Paul Veradittakit, a Pantera analyst, amplified this view by stating that 2026 will likely be defined by institutional adoption focused on real-world asset tokenization, on-chain security driven by artificial intelligence, bank-backed stablecoins, consolidation in prediction markets, and increased initial coin offerings, shifting the focus away from the disorderly speculative growth of the past.