Bitcoin may be heading into an extended decline, per Cantor Fitzgerald, but this could precede a shift towards a more stable and institutionally driven phase in the crypto sector.
Markets seem to be at the beginning of a crypto winter, echoing bitcoin’s historical four-year cycle, as indicated in a year-end report by analyst Brett Knoblauch. Bitcoin has surpassed its peak by around 85 days, and Knoblauch predicts that prices may stay under pressure for several months, potentially testing Strategic’s (MSTR) average breakeven mark of approximately $75,000.
Unlike earlier downturns, this one may be characterized differently, lacking mass liquidations or structural failures. Institutional players, rather than retail traders, are now shaping the market dynamics, according to Knoblauch, who has noted an increasing divergence between token price movements and underlying activities, particularly in decentralized finance (DeFi), tokenized assets, and crypto infrastructure.
Consider the tokenization of real-world assets (RWA). The report highlights that the on-chain value of tokenized RWAs—such as credit products, U.S. Treasuries, and equities—has surged threefold this year to $18.5 billion. Cantor anticipates this figure could exceed $50 billion by 2026, as more financial institutions begin experimenting with on-chain settlement.
This transformation is also reflected in trading practices. Decentralized exchanges (DEXs), which function without intermediaries, are capturing market share from centralized platforms. While trading volumes may decrease in 2026 in line with bitcoin’s price, Cantor expects DEXs, particularly those handling perpetual futures, to continue their growth as both infrastructure and user experiences improve.
Regulatory clarity plays a crucial role in this evolving environment. The recent enactment of the Digital Asset Market Clarity Act, or CLARITY, in the U.S. signifies a pivotal moment, as noted in the report. This law clarifies the circumstances under which a digital asset is regarded as a security versus a commodity and designates primary oversight of spot crypto markets to the Commodity Futures Trading Commission (CFTC) once certain decentralization criteria are met.
This legal framework could mitigate headline risks and facilitate banks and asset managers’ more direct involvement in crypto markets. Furthermore, it enhances the legitimacy of decentralized protocols by providing compliance routes, which have historically posed significant challenges.
Other notable trends pointed out by Cantor include a surge in on-chain prediction markets, particularly in sports betting, where trading volumes have soared to over $5.9 billion—representing more than 50% of DraftKings’ volumes in the third quarter. Companies like Robinhood (HOOD), Coinbase (COIN), and Gemini (GEMI) are entering this space, offering fairer, order book-driven alternatives to conventional sportsbooks.
However, risks persist. Bitcoin’s price is currently roughly 17% above the average cost basis of Bitcoin treasury company Strategy. A drop below this threshold could unsettle the market, even as Cantor expresses confidence that the firm is unlikely to divest. Meanwhile, digital asset trusts (DATs) have slowed their acquisition pace as token prices and trust premiums decline.
The upcoming year might not herald a major breakout for crypto. Yet, the foundation for more robust infrastructure and increased institutional adoption seems to be solidifying, even as prices decline.
