Pantera notes that 2025’s whipsaw moves forced capitulation, setting the stage for a potential 2026 crypto rebound

Pantera Capital says 2025 was, in reality, a deep bear market for most crypto tokens, even if headlines painted it as a choppy year.

In its Navigating Crypto in 2026 report, the venture capital firm noted that non-bitcoin tokens have been sliding since December 2024, dragged down by weak value capture, slowing on-chain activity, and fading retail demand. Excluding bitcoin (BTC $88,654), ethereum (ETH $2,942), and stablecoins, total market capitalization fell roughly 44% from late-2024 highs through the end of 2025.

The downturn pushed sentiment and leverage to levels historically linked to capitulation, when investors sell in panic to cut losses. While bitcoin finished the year down about 6%, most other tokens endured far steeper declines: ETH fell roughly 11%, SOL dropped 34%, and the broader token universe tumbled nearly 60%, with the median token down 79%. Pantera described 2025 as a narrow market, with only a small fraction of tokens producing gains.

According to the firm, market movements were driven more by macro shocks, positioning, and flows than fundamentals. Repeated whipsaws tied to policy shifts, tariff threats, and changing risk appetite culminated in an October liquidation cascade that erased over $20 billion in notional positions—larger than losses seen during the Terra/Luna and FTX collapses.

Structural weaknesses compounded the decline. Many governance tokens lack clear legal claims to cash flows or residual value, helping digital asset equities outperform. On-chain fundamentals also softened, with falling transaction fees, application revenue, and active addresses, even as stablecoin supply grew.

Pantera said the duration of the drawdown now mirrors prior crypto bear markets, setting the stage for a potentially more favorable 2026 if fundamentals stabilize and market breadth improves. Rather than issuing 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.

Pantera partner Paul Veradittakit said growth in 2026 will focus on institutional adoption, including 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.