2025 Crypto Bear Market “Repricing” Institutional Capital: Analyst
The sharp drop in altcoins over the past year may reflect a broader assessment that blockchain networks can attract long-term capital as institutional investors slowly begin to enter the market over several years, analysts say.
2025 turns out to be a bear market for the broader cryptocurrency market, excluding Bitcoin (BTC). Decentralized financial (DeFi) tokens fell 67%, while smart contract-related cryptocurrencies experienced a negative average return of 66%, according to Jamie Coutts, chief crypto analyst at Real Vision, according to shared blockchain data.
Last year's poor performance was “underpricing” of leading crypto projects as institutional capital sought to gain greater exposure, Coutts wrote in a Wednesday X post.
“High-quality (network adoption, fundamentally sound) replacement protocols/L1s just as institutional capital begins a multi-year onboarding,” he said.
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Coutts is the latest analyst to highlight the continued value of how cryptocurrencies are valued as maturing digital asset investors seek exposure not only to altcoins in general, but to protocols powering tokens through organic usage and revenue.
Looking at last year, Solana was the leading blockchain in payments with $585 million in revenue, followed by Tron with $576 million in revenue, according to crypto intelligence platform Nansen.
According to Nansen research analyst Nikolai Sondergaard, institutional and large investors tend to gravitate towards the five leading cryptocurrencies.
“Solana ETFs are still seeing inflows, but the same cannot be said to be fully onchain. ETH, on the other hand, has seen some players spin off from BTC,” the analyst told Cointelegraph.
Many expect the big players to rally as liquidity returns, and that seems accurate based on on-chain and off-chain data.
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Despite the 2025 altcoin bear market, institutions have launched regulated altcoin investment vehicles.
Despite last year's poor performance, large financial institutions, including US investment bank Morgan Stanley, continue to launch regulated crypto investment products.
Morgan Stanley filed on Tuesday to launch two cryptocurrency exchange-traded funds (ETFs) – one tied to Bitcoin and the other to Solana – followed by news on Wednesday of a third ETF filing tied to Ether (ETH), a sign of a deeper crypto push from Wall Street participants.
However, industry participants shared related predictions about the performance of the cryptocurrency market in 2026.
Jack Yee, founder of Hong Kong-based investment firm Trend Research, said he was “bullish” on crypto for the first half of 2026, while Fundstrat Global Advisors predicted a local ether bottom of around $1,800 in the first quarter of the year, Cointelegraph reported.
However, an internal memo written by Fundstrat co-founder and managing partner Tom Lee also predicted a “year-end” rally, after crypto markets hit “sustainable lows” in the first quarter.
Lee is also the chairman of BitMine Immersion Technologies, the largest corporate ether holder with total ETH holdings of $13 billion.
Still, last year's gains have been “cleaned up,” bringing cryptocurrency prices to “levels that meet institutional entry limits” amid growing regulatory transparency, according to Bitget Wallet market analyst Lacy Zhang.
More regulated crypto ETFs and bipartisan growth in crypto regulation suggest that “2026 could see a further shift in long-term institutional adoption from cyclical to persistent accumulation,” the analyst told Cointelegraph.
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