2026 Crypto Market Structural Outlook Report | Bear Or Bull

1. Executive Summary

This report aims to use a six-dimensional analytical framework to project key structural trends in the crypto market in 2026. This framework integrates the macro-monetary environment, on-chain capital structure, narrative cycles, regulatory frameworks, technological protocol evolution, and market microstructure. We abandon single-point predictions and explore possible market paths under different combinations of variables through three scenarios: baseline, risk, and tail scenarios.

Core variables and scenario matrix:

Conclusion SummaryIn the baseline scenario, the market in 2026 will exhibit a highly volatile structural bull market, with capital rapidly rotating between different narratives, and the L2 ecosystem and the Bitcoin ecosystem being the main battlegrounds. The risk scenario points to a deep correction and liquidity depletion, with the market entering a "crypto winter 2.0". The tail scenario relies on an unexpected release of macro liquidity or a paradigm shift in technological applications, potentially triggering exponential growth.

2. 2025 Review: Confirmatory Analysis Framework

Reviewing market forecasts for 2025 serves as the logical starting point for constructing the 2026 outlook. Previously, key variables we focused on included the approval of an ETH spot ETF, the growth of TVL in restaking protocols, the recovery of the Solana ecosystem, and the sustainability of the AI ​​narrative.

• ETH Spot ETFAs expected, approval is anticipated in Q2-Q3 of 2025, but the initial inflow of funds (approximately $0.5B-$1B per month) is lower than the most optimistic market expectations, indicating that institutional allocation is still in the exploratory stage. This validates the judgment that "regulatory approval does not equate to immediate large-scale adoption."

• Restaking 与 LRTsEigenLayer and its ecosystem's TVL surpassed $50 billion in 2025, becoming a core layer of DeFi liquidity. However, its complexity also brought new systemic risks, with multiple slashing incidents involving operators confirming the symmetry between returns and risks.

• Solana EcosystemThe Fireracer client launched on the mainnet in the second half of 2025, significantly improving network throughput and stability. Applications such as DePIN, Meme, and Perp DEX saw growth, but no "killer app" has yet emerged to surpass the Ethereum ecosystem.

• AI+Crypto NarrativeThe narrative, from the computing power market to AI agents, remained popular throughout the year. However, most projects remained in the proof-of-concept stage, and the autonomous economic activities of on-chain AI agents had not yet reached a significant scale, validating the view that "technological integration takes time, and we should be wary of excessive hype."

Overall, the market in 2025 largely met expectations of "structural differentiation." The upper limit of macro liquidity tightening constrained the overall market beta, but specific narratives (Restaking, Solana, AI) brought significant alpha opportunities.

3. Macroeconomic Environment Analysis

Macro liquidity is a core constraint defining crypto market beta. The key in 2026 lies in the policy paths of global central banks, particularly the Federal Reserve, and the liquidity operations of the US Treasury.

3.1 Interest Rate Path and Inflation Dynamics

• variableUS core PCE, non-farm payroll data, and wage growth rate.

• mechanismThe Federal Reserve adjusts the federal funds rate based on the "data-dependent" principle. High inflation and strong employment will delay rate cuts, while the opposite will accelerate them.

• Baseline ScenarioThe core PCE rate is projected to stabilize between 2.5% and 2.8% by the end of 2025. The Federal Reserve is expected to cut interest rates by 25 basis points for the first time in Q2 or Q3 of 2026, with a cumulative cut of 50-75 basis points for the whole year. This provides a mild tailwind environment for risk assets.

• Falsifiable conditionsIf core PCE unexpectedly rebounds to above 3% in Q1 2026, the first rate cut is expected to be postponed to Q4 or 2027.

3.2 US Fiscal Liquidity (TGA & RRP)

• variable: Treasury General Account (TGA) balance, overnight reverse repurchase (RRP) size, Treasury Quarterly Refinancing Plan (QRA).

• mechanismA decrease in RRP balances injects liquidity into the market, while an increase in TGA balances drains liquidity from the market. The relative changes in these two factors together determine the level of bank reserves, which in turn affects the prices of risky assets.

• Baseline ScenarioThe RRP is expected to be largely exhausted by Q1 2026. The TGA will remain within the target range of $750 billion to $850 billion. Treasury bond issuance will remain stable, with a neutral impact on market liquidity.

• Falsifiable conditionsIf the US government fiscal deficit expands beyond expectations, resulting in net issuance of Treasury bonds exceeding $2.5T in 2026, it will have a crowding-out effect on private sector credit, creating a de facto liquidity crunch.

3.3 USD cycle

• variableDXY index, US-EU-Japan interest rate differential.

• mechanismA strong US dollar typically suppresses global liquidity, putting pressure on capital in non-US regions and negatively impacting the crypto market (especially trading pairs with non-US fiat currencies).

• Baseline ScenarioWith the Federal Reserve beginning to cut interest rates, and the European Central Bank and the Bank of Japan having limited policy space, the US dollar is expected to show a moderate downward trend in 2026, with the DXY index fluctuating between 98 and 105.

• Falsifiable conditionsThe emergence of an energy crisis 2.0 in Europe or a surprise sharp interest rate hike by the Bank of Japan could disrupt expectations of a moderate decline in the US dollar.

4. Evolution of On-Chain Capital Structure

On-chain data provides a micro-perspective for observing the internal structure of the market, capital preferences, and investor behavior.

4.1 Capital Age and Activity

• variable: BTC/ETH HODL Waves, long-term/short-term holder supply ratio, daily active addresses (DAA).

• mechanismAn increase in the supply share of long-term holders (LTH) typically indicates that the market is entering an accumulation phase, while a large-scale sell-off signals the top of a bull market. The number of active addresses reflects the actual usage of the network.

• Baseline ScenarioIn 2026, with the slow influx of new users, the supply ratio of Short-Term Holders (STH) will fluctuate between 15% and 30%. During price corrections, LTH supply will see net growth. Mainstream L1/L2 DAA will experience plateau-like growth rather than an exponential surge.

• Falsifiable conditionsThe LTH supply ratio of BTC has decreased by more than 10% over three consecutive months, which may indicate that the top of the cycle is approaching.

4.2 Stablecoins and Liquidity Distribution

• variableTotal market capitalization and on-chain distribution of mainstream stablecoins (USDT, USDC, etc.), and the ratio of DEX trading volume to TVL.

• mechanismThe growth in the total market capitalization of stablecoins is a direct reflection of purchasing power in the crypto market. Their distribution across different chains (L1/L2/Sidechain) reflects the direction of capital flows and ecosystem preferences.

• Baseline ScenarioThe total market capitalization of stablecoins is projected to grow moderately to $200-$250 billion in 2026. Of this, the proportion of stablecoins on L2 cryptocurrencies will increase from approximately 15% by the end of 2025 to 25%-30%. USDT will continue to dominate trading scenarios, while USDC will expand its share in compliance and RWA scenarios.

• Falsifiable conditionsIf there is a severe regulatory crackdown or trust crisis on mainstream stablecoins (especially USDT), it will lead to a complete liquidity crunch in the market.

5. Narrative Cycles Monitoring

Capital rotation in the crypto market is highly dependent on narrative. Identifying the lifecycle of a narrative (emergence, growth, maturity, decline) is crucial.

• AI + CryptoThe first round of hype was completed in 2025. The key in 2026 is...Verifiable on-chain agent economic activity。

  • ChanceIt focuses on infrastructure for decentralized computing, data verification, and inter-agent payment settlement.

  • riskMost projects are still at the "API encapsulation" level, lacking native cryptographic value.

• **Real-world assets (RWA)**In 2025, the focus will be on the tokenization of government bonds. In 2026, [the focus will shift to...].More diversified asset classesExtend.

  • Chance: Compliant tokenization platforms, derivatives such as credit default swaps (CDS) for RWA, and AMMs that can handle illiquid assets.

  • riskThe challenges include an unclear legal framework, risks associated with centralized custody, and the impact of rising macroeconomic interest rates on the yield of tokenized assets.

• RestakingIt has entered a mature stage and become the foundational yield layer of DeFi. The focus in 2026 is...Complex Applications Based on Restaking (AVS)。

  • ChanceInnovative AVS technologies, such as decentralized sorters, oracle networks, and coprocessors, will further unlock the DeFi composability of LRT.

  • riskThe risks include the complexity of the protocol leading to "bugs," the risk of operator centralization, and the reduced attractiveness due to the decline in the yield of the underlying ETH staking.

• L2s & Parallel EVMCompetition among L2 licensed users is intensifying. By 2026,Parallelized EVM(such as Eclipse, Neon) andZK-based L2This will become key to the performance race.

  • ChanceApplications that can effectively utilize parallel processing capabilities (especially Perp DEX and on-chain games), as well as infrastructure that provides cross-L2 general liquidity and messaging.

  • riskCentralization and censorship risks of L2 sorters, and cost and efficiency bottlenecks in ZK-Rollup proof generation.

• Bitcoin ecosystemAfter exploring inscriptions and L2 in 2025, 2026 will focus on...A more usable Bitcoin L2 solution。

  • ChanceL2: Able to natively use BTC as gas and asset, and provides smart contract functionality.

  • riskThe reasons include: differences in technical approaches, conflicts in community culture, and disadvantages in developer tools and composability compared to the Ethereum ecosystem.

6. Regulatory Landscape

Regulation is a key external variable affecting the institutionalization process of the crypto market.

• USAThe SEC is expected to continue its "enforcement-style regulation" strategy in 2026.

  • Baseline ScenarioLawsuits against some DeFi protocols and stablecoins will continue, but will not deal a fatal blow to core infrastructure (such as ETH and mainstream L2). Market focus will shift to Congress, anticipating bipartisan stablecoin or market structure legislation.

  • Risk ScenarioSEC Chairman Gary Gensler has taken a more aggressive step by defining mainstream L2 tokens, or DeFi governance tokens, as securities.

• EuropeMiCA regulations will enter a observation period after full implementation in 2025.

  • Baseline ScenarioThe market will adapt to the MiCA framework in 2026, giving compliant stablecoin issuers and CASPs (crypto asset service providers) a competitive advantage. Discussions on MiCA 2.0 will begin, potentially covering DeFi and NFTs.

• AsiaHong Kong and Singapore will continue to play the role of hubs for crypto innovation.

  • Baseline ScenarioHong Kong may approve more types of crypto ETFs (such as L2 token portfolios). Singapore continues to strengthen its regulatory framework under the Payment Services Act, attracting family offices and institutional capital.

7. Technology & Protocol Layer Evolution

• ZK technologyWhile the speed and cost of proof generation will continue to be optimized, it is still far from large-scale, low-cost applications. In 2026, ZK coprocessors will become an important direction, allowing off-chain computation and submitting the results on-chain in the form of ZK proofs, balancing performance and trust.

• ParallelizationSolana's Firedancer test has proven its effectiveness. The Ethereum ecosystem will catch up through parallel EVMs (such as the Eclipse Mainnet) and state management optimizations (such as state separation). This will enable high-frequency trading, complex DeFi strategies, and more on the EVM chain.

• Modularization vs. IntegrationModular architectures (DA layers represented by Celestia) will face strong challenges from integrated L1 architectures (such as Solana) in 2026. The market will test whether the sovereignty and flexibility brought by modularity can offset its increased complexity and potential liquidity fragmentation.

• AI Agents and Smart ContractsBy 2026, hybrid agents combining large language models (LLMs) and smart contracts will emerge. These agents can autonomously analyze on-chain data, execute transaction strategies, and participate in governance voting. The core challenge lies in ensuring the determinism and security of agent behavior.

8. Market Microstructure

• Funding RatesFunding rates will continue to serve as a core indicator for measuring market leverage and sentiment. In the highly volatile environment of 2026, extreme positive/negative values ​​(annualized rates exceeding 100%) will occur frequently, becoming an important signal for contrarian traders.

• liquidation mechanismAs Perp DEX matures (refer to dYdX, Hyperliquid, etc.), the efficiency and decentralization of the liquidation engine will improve. The focus will shift from "whether a large-scale liquidation will occur" to "the impact of a liquidation on the price of the underlying asset and on-chain liquidity."

• Positions and leverageThe increasing popularity of BTC and ETH spot ETFs will introduce new leverage tools to the market (such as ETF-based options). This could lead to an interaction between on-chain leverage and traditional financial market leverage, increasing system complexity.

• Option skewThe 25-delta skew will become a key indicator of medium- to long-term market expectations. If call options continue to trade at a significant premium, it indicates strong upward expectations in the market; conversely, a premium for put options suggests risk aversion.

9. Three Scenarios for 2026

Baseline Scenario: A High-Volatility Structural Bull Market

• MacroThe Federal Reserve is expected to begin moderate interest rate cuts in the second half of the year, with liquidity remaining neutral to slightly loose.

• marketBTC is fluctuating widely between $80k and $150k. ETH is in the $5k-$10k range. The altcoin market is experiencing dramatic sector rotation, with capital rapidly shifting between narratives related to AI, RWA, L2, and DePIN.

• Dominant LogicContinued institutional buying from ETFs provided a price floor, but macroeconomic uncertainty and internal leverage liquidation amplified volatility. The market shifted from a broad-based rally to a focus on fundamentals and narrative strength.

Risk Scenario: "Liquidity Trap and Regulatory Winter"

• MacroUS inflation has rebounded, forcing the Federal Reserve to maintain high interest rates or even raise them, and the dollar index has returned to above 110.

• marketBTC fell below $50k, and ETH fell below $3k. Market trading volume and on-chain activity shrank significantly.

• Dominant LogicTightening macro liquidity led to a broad sell-off of risky assets. Simultaneously, the SEC's stringent regulatory measures on mainstream DeFi protocols and stablecoins destroyed market confidence. "Black swan" events in complex systems like EigenLayer triggered a chain reaction of deleveraging.

Tail-end scenario: "Paradigm break and exponential growth"

• MacroThe risk of a global economic recession has intensified, prompting major central banks to coordinate and launch large-scale quantitative easing (QE) policies.

• marketBTC broke through $200k and ETH broke through $15k. The market is experiencing a full-blown bull market.

• Dominant LogicA massive influx of fiat currency liquidity into the limited crypto asset market. Simultaneously, the widespread adoption of an AI+Crypto application or RWA platform attracted users and capital from outside the crypto space, creating an "iPhone moment" that fundamentally altered the valuation logic of crypto assets.

10. Identification of Structural Opportunities

• **Interest Rate Derivatives Market (Benchmark/Risk Scenario)**In a volatile interest rate environment, there will be huge demand for interest rate swaps (IRS) and fixed-rate products targeting ETH staking yields, stablecoin lending rates, and LRT yields.ConstraintsThere is a need for efficient and low-cost oracles and liquidation systems.

• **Decentralized computing power and data markets (all scenarios)**Regardless of the pace of AI development, the need for verifiable computation and data remains constant. DePIN and middleware protocols focused on providing GPU computing power, model training/inference verification, and data profiling have long-term value.ConstraintsThe cost and ease of use gap with Web2 cloud services needs to be addressed.

• **Cross-chain liquidity and execution layer (benchmark/tail scenario)**With the proliferation of L2 and application chains, the fragmentation of assets and state will become more severe. Protocols that can provide secure and efficient cross-chain liquidity aggregation and universal execution will become core infrastructure.ConstraintsA balance must be struck between security, speed, and cost to avoid becoming a new centralized point of failure.

• **RWA Compliance Infrastructure (Baseline/Tail Scenario)**As the regulatory framework becomes clearer, service providers offering KYC/AML solutions, asset tokenization standards, and compliant stablecoin channels to institutions will capture significant value.ConstraintsIt is highly dependent on the evolution of laws in various countries, and there is policy uncertainty.

11. Risk Factor Checklist

• Macroeconomic risksGlobal inflation stickiness exceeds expectations; sovereign debt crisis; soaring energy prices due to geopolitical conflicts.

• Regulatory risksThe US has classified ETH or other mainstream PoS tokens as securities; imposed sanctions on core stablecoins such as USDT; and banned decentralized front-ends.

• Technology and security risksSystemic forfeiture incidents occurred in the Restaking protocol; a major vulnerability was discovered in the ZK circuit or proof system; another large-scale theft occurred in cross-chain bridges; centralized malicious behavior occurred in the L2 sorter.

• Internal market risks: Chain liquidation caused by excessive leverage; DeFi systemic collapse triggered by LRT asset de-anchoring; capital mismatch and liquidity trap caused by the Meme coin craze.

• Centralization riskSingle points of failure in critical infrastructure (such as Infura and Cloudflare); lack of transparency or misappropriation of assets by stablecoin issuers.

12. Self-Correction & Validation

• Assumptions：

  1. This report assumes that there will be no global, non-economic black swan events (such as large-scale wars or global pandemics).

  2. Assuming that the basic security model of blockchain technology (such as PoW for BTC and PoS for ETH) will not be fundamentally breached by 2026.

  3. We assume that the behavioral patterns of market participants (following narratives, leverage preference) are somewhat comparable to historical cycles.

• Data source：

  • Macroeconomic data: U.S. Bureau of Economic Analysis (BEA), Bureau of Labor Statistics (BLS), Federal Reserve (FED), Treasury Department.

  • On-chain data: Glassnode, Dune Analytics, DeFiLlama, Artemis, Token Terminal.

  • Market data: CoinGecko, CoinMarketCap, The Block, Kaiko, Laevitas.

• Falsifiability Statement：

  • Baseline ScenarioIf the price of BTC does not reach $80k or the price of ETH does not reach $5k by the end of 2026, and macro interest rates do not enter a downward trend, then the baseline scenario will be disproven.

  • Risk ScenarioIf the market does not experience a maximum annual drawdown of more than 40% in 2026, and no major regulatory lawsuits occur against core DeFi protocols, then the risk scenario is disproven.

  • Tail sceneIf the total market capitalization of crypto does not exceed $8T in 2026, and no native crypto application with more than 10 million users emerges, then the tail scenario will be disproven.

All views expressed in this report are based on current information and analytical framework and do not constitute any investment advice. The non-linear nature of market evolution means that any long-term forecast is subject to significant uncertainty, and this framework will be continuously revised based on actual changes in core variables.