2025 - Year in Review
The past year has been a conundrum. Fundamentals are stronger than ever, yet BTC has underperformed major asset classes. When prices and fundamentals diverge, opportunities arise, and we believe 2026 sets the stage for a strong BTC resurgence.
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LINK TO THE REPORTNever has BTC performance been more detached from BTC headlines than in 2025. The divergence is simple to explain. OGs have sold, with both hands. Isolated bubbles and temporary leverage imbalances have left their mark on the crypto market in 2025, leading BTC to underperform all other major asset classes. That underperformance occurred in a year in which the world’s largest economy introduced a strategic bitcoin reserve, while fully opening the gates for institutions to participate in the market. When prices and fundamentals move in opposite directions, opportunities arise. With this in mind, we enter 2026 with a constructively bullish view.With poor performance comes fear. The span between BTC’s 2022 low and the October 2025 high mirrors the duration of the two previous cycles. This has popularized the view that the four-year cycle is due to repeat once again. We view this bias as a classic example of not seeing the forest for the trees.Former yearlong drawdowns were accompanied by hiked interest rates, and dreams failing to meet reality. The 2017 cycle peaked alongside a dream of an institutional frenzy from the launch of CME futures. The 2021 cycle peaked alongside a dream of an institutional frenzy from the launch of BTC ETFs, a dream shattered by an arbitrary and capricious SEC denial. In 2025, dreams have become reality. BlackRock did not manage $100bn worth of BTC, and Morgan Stanley did not guide advisors to recommend allocations in crypto ETFs at the peak in 2021 or 2017. The U.S. president did not sign executive orders aiming to expand the $9tn suite of 401(k) plans to include cryptocurrencies within the next half-year, nor had any President launched a Strategic Bitcoin Reserve. During the 2021 climax, tighter monetary policy and expected post-COVID sobriety coincided with the peak. In 2026, Trump is expected to replace Jerome Powell with a dovish chair, putting out the fire from the expansionary Big Beautiful Bill with gasoline. Abundance, rather than restrictive austerity, is on the books, a setup clearly favoring scarce assets like bitcoin. What we have left is the dangerous-looking fractal, a scary reminder that BTC usually tops around 1,060 days after it bottoms. A simple chart, stripped of substance, but so scary-looking that some act on it. Growing painsThere is no doubt that the crypto sector has had a spectacular year. The U.S. government has launched its own bitcoin reserves. State pension funds in Abu Dhabi and Luxembourg have allocated 1–3 percent of their capital to bitcoin, and Harvard has done the same within its massive endowment. In traditional finance, rapid changes are underway: Morgan Stanley and Bank of America are opening up to including up to four percent bitcoin in opportunistic portfolios, and JP Morgan moves to allow certain clients to use crypto as loan collateral.This development would have been unthinkable without new regulatory frameworks. The eurozone has adopted comprehensive regulations, the U.S. has passed legislation for stablecoins, and broader crypto legislation is expected to be signed early in 2026. Clear rules reduce the barrier to participation for the world’s largest financial institutions. A sector previously considered radical and unregulated is becoming part of the established financial infrastructure.Not everyone welcomes this normalizationBitcoin is a scarce digital store of value that operates outside the control of governments, central banks, and intermediaries. This was precisely the attribute that attracted many of the earliest owners, both as a technological alternative to the system and, for some, as an explicit protest against it.Today, Bitcoin functions largely as it always has: You can hold it yourself in a private wallet and send it to whomever you want, whenever you want, no matter where you are. Yet the ecosystem around it has changed dramatically. You must now verify your identity to purchase it, and soon you will be able to trade it through the same banks that were rescued with state bailouts after the financial crisis.This perceived “taming” of Bitcoin may help explain why many early holders are now selling. 20% of all Bitcoin UTXOs aged 2-years or more have been revived since January 2024. Realizing gains after more than 10,000 percent returns in a liquid market is natural. But the selling can also be interpreted as a reaction to Bitcoin’s new market structure and increasing integration into the established system.The redistribution of ownership has nonetheless been healthy. The massive selling pressure from old whales has been absorbed, and bitcoin is now held by far more hands than before. A significant share of the market has established new entry prices. The risk of further heavy selling pressure is therefore much lower than a year ago. Meanwhile, the bitcoin price, relative to global equity indices, has been pushed down to levels not seen since before the U.S. presidential election, an election that arguably marked the beginning of a new era for the sector.We hope you enjoy this report and wish you a merry Christmas and a happy new year!
