Year-end review of cryptocurrencies: 2025 marks a turning point towards "mainstream compliance", with Bitcoin causing chaos after the frenzy, stablecoins moving towards the center stage.

If 2024 was the year that cryptocurrencies opened the door of traditional finance with spot ETFs, then 2025 is the "watershed" year when this asset class officially enters the room and reshapes the global financial landscape. In this year, the crypto market bid farewell to the era of seismic shifts driven solely by emotions, and entered the era driven by institutional capital, regulatory policies, and practical applications. This is not just a leap in prices, but a deep paradigm shift: cryptocurrencies have evolved from marginalized digital assets to core infrastructure for global sovereign strategic reserves, corporate financial allocation, and global cross-border settlements. Noticeably, led by Bitcoin, the total market value of cryptocurrencies started the year at around $1.6 trillion, surged under an epic narrative, broke through the historic $4 trillion mark, and eventually closed the year with intense fluctuations, painting a candlestick chart worthy of financial history. The era of $4 trillion has arrived The total market value of the global crypto market in 2025 witnessed a historic breakthrough. At the beginning of the year, the market was hovering around the $1.6 trillion baseline. With the normalized inflow of global institutional funds, the market value surpassed $4 trillion in the third quarter. However, by the end of the year, influenced by the periodic tightening of global macro liquidity, the market saw a significant pullback. As of December 29, the price of Bitcoin fluctuated around $89,000 after continuous oscillations, falling by about 25% from the historic high of $126,000 set in October, with a drop of over 30% at one point. The volatility characteristics throughout the year also underwent a qualitative change, with the previous "crazy" spikes and drops gradually decreasing, replaced by market fluctuations around the Federal Reserve's monetary policy, nonfarm data, and progress in legislation. Bitcoin - aftermath of the frenzy The trend of Bitcoin in 2025 can be described as a textbook psychological warfare. With the spot ETF's scale surpassing $160 billion and the strong drive from the Trump administration for a "national strategic reserve," the market entered into a nearly paranoid state of optimism. In October, when Bitcoin hit a historical new high of $126,000, sentiment across the network reached its peak, with radical opinions suggesting that the price could reach $200,000 by the end of 2025. However, by December, the market logic took a 180-degree turn. As the Federal Reserve displayed unexpectedly hawkish stance towards rebounding inflation, global risk assets began to experience massive "dehydration." The price crash by December 26 was essentially a concentrated explosive liquidation of massive leverage positions accumulated throughout 2025. When Bitcoin dropped below $90,000, it not only erased most of the gains made in the fourth quarter but also sent a warning to all investors: even with the endorsement from Wall Street and the attention of sovereign nations, Bitcoin still retains its original, wild, and highly destructive nature of volatility. The presidential executive order in March 2025 sent the market into a frenzy. The proposed "U.S. Digital Asset Strategic Reserve" plan directly fueled a mid-term rise in Bitcoin. However, as the details of the "GENIUS Act" were disclosed, the market realized that establishing a national reserve is not a one-day task but involves complex sovereign asset swaps and legislative games. When the pace of the legislation slowed down in November compared to expectations, the bullish trend resulting from the "policy favors" quickly reversed. The meltdown at the end of December saw a significant amount of selling pressure coming from leveraged funds that had benefitted from early policy optimism. This volatility revealed a new feature of crypto assets in 2025: they have become a "political premium asset," with their prices no longer solely influenced by halving cycles but constantly under the spotlight of U.S. political games. This year, Ethereum began amidst skepticism, hit a historical high in the middle of the year, and eventually calmed down by the end of the year. From a low point of $1,646 in April to a peak of $4,946 in August, an astonishing rise of nearly 200%, followed by a near 40% pullback by the end of the year, Ethereum embarked on a dramatic curve in 2025. As of December 29, 2025, the price of Ethereum was around $3,000, a decrease of about 12% from the beginning of the year. Ethereum is currently facing multiple challenges; in terms of market share in the public chain fee market, Ethereum has dropped to 17%, ranking fourth among public chains, facing fierce competition from rivals like Solana and Hyperliquid. Ethereum is transitioning from a purely utility asset to a value storage medium with monetary attributes. If Bitcoin's currency narrative continues to strengthen in 2026, Ethereum, as a high-beta asset, is expected to see significant gains. Apart from the two major cryptocurrencies, most altcoins reached annual highs in the beginning or first half of the year, followed by deeper declines well beyond Bitcoin. For example, Solana saw a pullback of over 60% from its peak, and Avalanche, Polkadot, and others also experienced similar or even greater declines, with some altcoins plummeting by over 90%. This reflects that in times of increased market uncertainty, funds tend to withdraw first from high-risk altcoins. Furthermore, an unprecedented phenomenon is the qualitative reversal in the correlation between cryptocurrencies and U.S. stocks (especially the Nasdaq index). In the first half of the year, the crypto market's surge acted as a trumpet call, greatly boosting the risk appetite in the global tech sector, with crypto assets becoming a leading indicator of market sentiment for traditional funds. However, as the market entered into high-level fluctuations at the end of the year, this correlation showed its grim side: the sharp drop in the crypto market due to leveraged liquidation quickly spread to traditional stocks. Institutions were forced to sell more liquid stock assets to cover margins, leading to a "crypto decline sell-off in U.S. stocks escalating panic" death spiral. Cryptocurrencies have transitioned from being a marginal risk asset to a systemic variable capable of disturbing global financial stability. Government policies, institutional fervor, and political whirlpool The core engine driving the market trends in 2025 is not just technological breakthroughs, but the tectonic movements at the junction of politics and regulatory frameworks. Market data shows that the bull market of cryptocurrencies, including Bitcoin, in 2025 was primarily driven by institutions. For example, the net inflow of institutions through channels like ETFs in 2024-2025 amounted to $44.2 billion, holding 5.7%-7.4% of Bitcoin's circulation, marking the first time Bitcoin entry was monopolized by ETFs, with retail traders not participating in the primary bull wave. Why did institutions enter the market full force in 2025? The main factors were the maturing of regulations and high institutional demand, as the underlying changes in regulations allowed institutions to enter the crypto asset space legally, compliantly, and at scale. The election of Trump brought about a 180-degree turn in U.S. crypto policy. With the Trump administration coming into power, the crypto market entered an unprecedented "policy dividend period." However, this dividend came with profound controversy. The strong fundraising power demonstrated by the Trump family through their project World Liberty Financial sparked intense debate in the market about the "conflict of politics and interests." This deep connection between "politics + cryptocurrencies" not only boosted the market activity in the short term but also led to widespread criticism regarding fairness and transparency in the industry. On July 18, 2025, the "GENIUS Act," viewed as the fundamental law of the crypto industry, officially came into effect. It was the first federal-level regulatory framework established for stablecoins and digital assets in U.S. history. It not only cleared legal obstacles for banks to engage in crypto custody, but more importantly, subjected stablecoins to strict audits similar to those of banks. However, the clarity in regulation proved to be a double-edged sword. While it attracted giants like Apollo and BlackRock for deeper involvement, it also brought about extremely high compliance costs. The market turmoil in December was triggered by panic arising from the intrusive regulatory requirements of the act on certain DeFi protocols, causing a significant portion of on-chain funds to exit in order to avoid potential legal risks. This short-term pain from regulation was a necessary price to pay for the market transformation from "reckless growth" to "institutionalized operation" in 2025. In this year, the SEC's targeting of "crypto projects" shifted the regulatory focus from individual legal actions to the modernization of underlying infrastructures. By establishing digital asset transfer agents and modern custody rules, 2025 became the inaugural year for tokenization to truly land in a compliant manner. This shift in regulatory logic blurred the boundaries between the crypto market and traditional finance, but also left crypto assets unable to fend for themselves in times of global tightening liquidity due to their high correlation with traditional assets. Looking globally, the comprehensive implementation of the EU's MiCA regulation set boundaries for compliant operations, whereas countries like Singapore and South Korea established more detailed regulatory fences in the stablecoin and crypto lending sector. This clarity in the global regulatory framework, while narrowing down the grey areas of the past, also cleared the final psychological barrier for large capital to enter the field. The transparency in regulation, like a key, opened the safes of traditional financial giants. Constant net inflows into Bitcoin and Ethereum spot ETFs became the "ballast" of the market throughout the year. The introduction of crypto ETPs in locations like Hong Kong further broadened the channels for compliant capital entry. The institutionalization process was no longer just a trend but had become an established fact. This frenzy not only swept over financial institutions but also ensnared a group of listed companies. From Strategy to a batch of small and medium-sized tech companies, by issuing convertible bonds or pledging equity, they crazily increased their holdings in cryptocurrencies, attempting to replicate the wealth myth of "buying coins with debt price rise explosive market capitalization." This strategy of deeply intertwining the fate of a company with a single high-risk asset acted as a rocket booster for its stock price during the bull market but could turn into a "bomb" in times of volatility, potentially detonating itself and even a part of the market. The relationship between companies and the crypto market was a symbiotic one of prosperity and loss, but also rife with dangers. Following Bitcoin's strong surge in early October, reaching a historical high of over $126,000, its price rapidly plummeted like a cliff, catching the bullish camp off guard, leaving the crypto asset market unstable and in turmoil. During this period, trading volume remained depressed, investor confidence was shaken, and many chose to withdraw from the Bitcoin ETF market. Data shows that since hitting the historical high in early October, Bitcoin has dropped by about 30%. During the same period, Strategy saw a price drop of over 50%. According to the company's website data, its key valuation indicator mNAV (i.e., the ratio of the company's enterprise value to its Bitcoin value) was around 1.1 on Monday. This serves as a reminder that investors are still concerned that this indicator, after enjoying a significant premium, could quickly turn negative. It is worth mentioning that indexing company MSCI is considering excluding companies that hold Bitcoin or other digital assets as treasury assets from its index and has sought opinions from the investment community. From the edge to the center stage: Stablecoins in 2025 If Bitcoin is the digital gold of the digital world, then stablecoins in 2025 are the "digital dollar blood." In this year, stablecoins completed their transformation from "crypto sideshow" to the core infrastructure of global capital flow. The total market value surpassed the historic $310 billion mark, with its daily settlement scale beginning to rival that of traditional payment giants like Visa and PayPal. A report by venture capital firm a16z shows that stablecoins achieved a total transaction volume of $46 trillion in the past year, an increase of 106% from the previous year. While this number mainly reflects capital flow rather than retail payments, the scale is almost three times that of Visa and approaches that of the entire U.S. banking system's ACH network. In the past year, over 1% of U.S. dollars existed in tokenized stablecoin form on public blockchains, with the adjusted trading volume breaking the $1.25 trillion mark in September, setting a new historical high. The maturation of infrastructure provided solid support for the explosive growth of stablecoins. Technical iterations in high-throughput Layer 1 chains like Solana and Layer 2 chains like Ethereum have reduced the transfer cost of stablecoins to less than a cent and shortened settlement times to under a second, breaking the efficiency bottleneck of traditional cross-border payments. On December 16, global payment giant Visa officially announced that U.S. banks could conduct settlements through the USDC stablecoin directly on the Solana blockchain, completely overturning the traditional finance industry's settlement cycles of T+3 to T+5. Currently, early adopters like Cross River Bank and Lead Bank have successfully implemented the program on the Solana blockchain. In the competitive landscape, while USDT has maintained its lead in scale, its market share is continuously being squeezed by "compliant stablecoins" represented by USDC, which have more transparent audits and stronger compliance. The IPO of Circle, the issuer of USDC, paved the way for its expansion in the institutional market. New players have also entered aggressively. The payment giant PayPal's PYUSD continues to penetrate its vast retail network, while new currencies like USD1 issued by World Liberty Financial under the Trump family bring new market variables with a mix of political and financial elements. The application of stablecoins has greatly expanded, serving not only for trading but also as the core medium for on-chain assets in the real world (RWA). From U.S. Treasury bonds, money market funds to gold and real estate, everything is becoming "tokenized." By holding "interest-bearing stablecoins" pegged to the dollar and generating income, investors can seamlessly access traditional financial markets, marking a significant step towards financial tokenization. The surge of AI has also triggered profound changes in the underlying computational infrastructure. A dramatic scene unfolds: traditional Bitcoin miners and AI computing service providers are converging. With the halving of Bitcoin mining rewards and intensifying competition, large listed mining companies (such as Core Scientific and Iris Energy) are transitioning to AI computing services on a large scale with their massive power contracts and existing data center facilities. Capital markets swiftly repriced this: mining companies with AI contracts are no longer just tied to Bitcoin prices but are evaluated based on their mining leasing income, resulting in higher price-earnings ratios. The crypto mining industry, once on the fringes, unexpectedly became the provider of core infrastructure for the AI era. Outlook for the Cryptocurrency Industry in 2026 2025 was undoubtedly a year of pressure and transformation for the cryptocurrency industry. Despite facing ongoing challenges from tightening global regulatory frameworks and market fluctuations in macroeconomic conditions, key trends have already taken shape: the flow of funds into Bitcoin spot ETFs has become an important indicator for market trends, the convergence of RWA, AI, and DePIN technologies has extended the reach of blockchain into the real economy. Several top institutions within the industry foresee the outlook for the cryptocurrency market in 2026, and a clear signal is emerging - the cryptocurrency market is transitioning from a period driven by emotions and retail investors to an "institutional era" centered on compliance, value, and long-term capital. The industry widely predicts that institutionalization and mainstreaming will deepen further, with more sovereign wealth funds (SWFs) and traditional pension funds likely to allocate a portion of their assets to the crypto realm once legal frameworks mature. The industry outlook indicates that structural maturity will replace speculative cycles, driven by converging liquidity, clear regulation, and infrastructure. Combining the outlooks of major institutions, the picture of the cryptocurrency market in 2026 is gradually becoming clear: 1) market conditions are expected to shift from headwinds to tailwinds. The potential rate cut by the Federal Reserve and improved global liquidity provide a positive macro backdrop; 2) the market fund structure is experiencing profound iteration, moving from short-term speculation toward long-term stable allocations through channels like ETFs, on-chain treasuries, with DeFi, RWA, and stablecoins playing vital roles in connecting traditional capital; 3) this shift also weakens Bitcoin's intrinsic four-year halving cycle effect, as the market may lean toward a slow, steady bull market reminiscent of gold; 4) in this process, stablecoins as a crucial financial infrastructure, alongside RWA, are driving real-world asset tokenization and expanding market depth; 5) as regulation gradually relaxes, prediction markets like Polymarket are expected to expand to broader financial applications; 6) the convergence of AI and blockchain is rapidly heating up, with blockchain poised to provide crucial trust, payment, and decentralized solutions for AI development, becoming a core narrative worth watching.