Pantera Capital says 2025 was, beneath the surface, a full-scale bear market for most crypto tokens, despite what appeared on the surface as a choppy year.
In its Navigating Crypto in 2026 outlook, the venture capital firm noted that non-bitcoin tokens have been in a sustained downturn since December 2024, weighed down by weak value capture, slowing on-chain activity, and fading retail flows. Total crypto market capitalization excluding bitcoin (BTC $88,654), ethereum (ETH $2,942), and stablecoins fell roughly 44% from late-2024 peaks through the end of 2025.
The decline pushed sentiment and leverage to levels historically associated with capitulation, a stage of panic-driven sell-offs where holders liquidate positions to limit further losses.
While bitcoin ended the year down only modestly, the rest of the market endured a grinding, largely unresolved drawdown. Bitcoin fell about 6%, ETH declined roughly 11%, SOL dropped 34%, and the broader token universe—excluding BTC, ETH, and SOL—plummeted nearly 60%, with the median token down about 79%. Pantera described 2025 as an exceptionally narrow market in which only a small fraction of tokens generated positive returns.
The firm said price action was dominated less by fundamentals than by macro shocks, positioning, flows, and market structure. The year featured repeated whipsaws tied to policy developments, tariff threats, and shifting risk appetite, culminating in an October liquidation cascade that erased over $20 billion in notional positions—larger than losses from the Terra/Luna or FTX collapses.
Structural challenges compounded the pressure. Pantera highlighted unresolved questions around token value accrual, noting that governance tokens often lack clear legal claims to cash flows or residual value, which helped digital asset equities outperform tokens during the year. On-chain fundamentals also softened, with declines in transaction fees, application revenue, and active addresses, even as stablecoin supply continued to grow.
Pantera said the drawdown now mirrors prior crypto bear markets, potentially setting the stage for a more favorable 2026 if fundamentals stabilize and market breadth returns beyond bitcoin. Rather than offering price targets, the firm frames the year ahead as a capital-allocation shift, with bitcoin, stablecoin infrastructure, and equity-linked crypto exposure likely to benefit first.
In December, Pantera partner Paul Veradittakit said 2026 will be defined by institutional adoption, with growth focused on 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.
