Crypto’s 2025 ‘whipsaw’ year drove capitulation as markets look toward a 2026 rebound, Pantera says

Core Insights - The crypto market experienced a significant bear market starting in December 2024, with total market capitalization excluding Bitcoin, Ethereum, and stablecoins dropping approximately 44% from its late-2024 peak through the end of 2025 [1] - The sentiment and leverage in the market reached levels historically associated with capitulation, indicating a panic-driven sell-off where holders liquidated positions to prevent further losses [2] Market Performance - Bitcoin ended 2025 down roughly 6%, while Ethereum fell about 11% and Solana declined 34%. The broader token universe, excluding BTC, ETH, and SOL, dropped close to 60%, with the median token down approximately 79% [3] - The market was characterized by extreme dispersion, with only a small fraction of tokens generating positive returns [3] Market Dynamics - Price action was dominated by macro shocks, positioning, flows, and market structure rather than fundamentals. The year saw repeated volatility linked to policy developments and risk appetite shifts, culminating in a major liquidation cascade in October that wiped out over $20 billion in notional positions [4] - Structural issues, such as unclear legal claims to cash flows for governance tokens, contributed to the pressure on the market, leading to digital asset equities outperforming tokens [5] Future Outlook - The duration of the current drawdown mirrors prior crypto bear markets, potentially setting up a more favorable backdrop for 2026 if fundamentals stabilize and market breadth returns beyond Bitcoin [6] - The firm anticipates 2026 will be characterized by institutional adoption, focusing on real-world asset tokenization, AI-driven on-chain security, bank-backed stablecoins, and a surge in crypto IPOs rather than a broad return to speculative token rallies [7]