The year 2025 proved to be a challenging one for the crypto market, as revealed by Pantera Capital, a prominent venture capital firm. Despite appearances of a choppy year, it was actually a full-scale bear market for most tokens that had begun over a year earlier. According to Pantera Capital’s 2026 outlook, the non-bitcoin token market had been experiencing a sustained downturn since December 2024, with total crypto market capitalization excluding bitcoin (BTC), ethereum (ETH), and stablecoins dropping by about 44% from its late-2024 peak through the end of 2025.
The sentiment in the market was heavily impacted by the decline, leading to levels of leverage historically associated with capitulation. This stage signifies a panic-driven sell-off where holders lose hope of a recovery and start liquidating their positions to prevent further losses. While bitcoin managed to finish the year only slightly lower, the rest of the market endured a grinding and largely unresolved drawdown.
The dispersion in performance was extreme, with bitcoin ending the year down roughly 6%, ETH falling about 11%, and SOL declining by 34%. The broader token universe, excluding BTC, ETH, and SOL, saw a drop close to 60%, with the median token down roughly 79%. Pantera described 2025 as a narrow market where only a small fraction of tokens generated positive returns.
Macro shocks, positioning, flows, and market structure were identified by Pantera as dominating price action in 2025. The year was marked by repeated whipsaws tied to policy developments, tariff threats, and shifting risk appetite, culminating in a major liquidation cascade in October that wiped out over $20 billion in notional positions, surpassing the collapses seen during the Terra/Luna and FTX incidents.
Structural issues also contributed to the pressure on the market, with unresolved questions about token value accrual highlighted by Pantera. Governance tokens often lack clear legal claims to cash flows and residual value available to equity holders, creating uncertainty in the market. Digital asset equities outperformed tokens during the year, with on-chain fundamentals softening in the second half. This included declines in fees, application revenue, and active addresses, despite stablecoin supply continuing to grow.
Looking ahead to 2026, Pantera sees the duration of the drawdown in the wider market mirroring prior crypto bear markets, potentially setting up a more favorable backdrop if fundamentals stabilize and market breadth returns beyond BTC. Instead of offering price targets, Pantera frames 2026 as a capital-allocation shift, with bitcoin, stablecoin infrastructure, and equity-linked crypto exposure positioned to benefit first if fundamentals stabilize and risk appetite returns.
In a statement made in December, Pantera’s Paul Veradittakit mentioned that the firm expects 2026 to be defined by institutional adoption, with growth concentrated in real-world asset tokenization, AI-driven on-chain security, bank-backed stablecoins, consolidation in prediction markets, and a surge in crypto IPOs rather than a broad return to speculative token rallies.
