Crypto: Where Next?

Do you own any cryptocurrency? Would you like to? 

Here are a few considerations to weigh up before you make a decision.

2024: Great for Bitcoin. 2025: Not so Much

The flagship cryptocurrency [BTC] attracted a lot of attention over the course of 2024.

A major milestone was the launch of spot Bitcoin ETFs in January 2024, the most successful debut in ETF history.

On day one alone, these funds drew more than $4bn in inflows — an unprecedented figure that eclipsed the $1.2bn accumulated by gold ETFs in their entire first month back in November 2004. Demand has since far outstripped the early-stage inflows of nearly all 6,000 ETFs launched over the past three decades, according to a study from ARK Invest.

Meanwhile, bitcoin’s volatility declined to its lowest-ever point.

The cryptocurrency rode that wave through much of 2025. 

Bitcoin hit new all‑time highs above $125,000 in October, driven by strong ETF demand and institutional interest. Later, however, it fell sharply, erasing much of its annual gains into year‑end and finishing lower than many cyclical expectations. 

Annualized volatility eased compared with prior years, reflecting deeper institutional participation and more ranged trading dynamics. Despite positive regulatory developments and ETF inflows, macro headwinds and liquidations weighed on sentiment. Overall, bitcoin ended 2025 with a modest negative return, underperforming both equities and gold in broader asset class comparisons.

What About 2026?

The jury’s still out, although there is a growing sense that cautious optimism is the right outlook.

Analysts at Bernstein, for example, foresee the current crypto downturn reversing over the course of the year. 

Bitcoin may be in a “short-term bear cycle” that they expect to bottom near previous cycle highs ($60,000) in H1, before forming a higher base. The firm highlighted bitcoin’s underperformance versus gold over the past year, as central banks — including China and India — ramped up gold purchases. 

Bernstein sees the past two years as an “institutional cycle” for bitcoin driven by the rapid growth of spot ETFs and the emergence of corporate bitcoin treasuries. These developments fueled a strong rally before the recent pullback, setting this cycle apart from previous, retail-led boom-and-bust phases. 

The analysts also flagged US policy as a potential catalyst: the creation of a Strategic Bitcoin Reserve from seized government holdings, combined with possible Federal Reserve shifts under Kevin Warsh and broader political alignment with crypto, could elevate bitcoin’s role as a reserve-style asset.

Meanwhile, the cryptocurrency’s number-one cheerleader, Strategy [MSTR], bought $1.57bn of bitcoin in the first week of March — its largest purchase this year — adding 22,337 BTC, taking total holdings to about 761,000 BTC.

Citi Research recently lowered its twelve-month bitcoin price target to $112,000 from $143,000, citing slow progress on the Clarity Act. The firm outlined a wide valuation range: its bull case, driven by stronger investor demand, is $165,000, while a macro-led bear case sees a drop to $58,000.

Non-Bitcoin cryptocurrencies

A range of other cryptocurrencies are gaining traction, among them ether [ETH], Solana [SOL] and Tether [USDT]. These are designed for varied purposes beyond just storing value.

Ethereum is a leading smart contract blockchain. It is currently in a pivotal phase as institutional demand rises via ETF inflows and staking products, while macro uncertainty and regulation weigh on prices. Upcoming upgrades like Glamsterdam aim to improve scalability, with investor focus increasingly tied to network activity, Layer 2 growth and capital flows. Ether, Ethereum’s native altcoin, underpins transaction fees and staking.

Solana, meanwhile, is a high-speed blockchain gaining traction as institutional capital flows in via ETFs and staking products, while upgrades like Firedancer and Alpenglow improve reliability and scalability. Strong on-chain growth — rising stablecoin liquidity and decentralized finance (DeFi) activity — supports its investment case, though macro conditions and volatility remain key risks. Solana’s native token powers transactions, staking and network security, with demand increasingly driven by ETF inflows, yield generation and expanding DeFi and payments usage.

Lastly, launched in 2014, Tether is the largest stablecoin, pegged 1:1 to the US dollar and serving as a key liquidity and settlement tool across crypto markets. Recent growth in institutional adoption and ETF-linked products has reinforced its role as a low-volatility gateway, though regulatory scrutiny and reserve transparency remain watchpoints. Tether recently invested $5.2m in Ark Labs. The funding targets programmable infrastructure on the Bitcoin blockchain, aiming to allow stablecoins like Tether to move and settle directly on Bitcoin rails.

Is DeFi the Future?

As OPTO recently detailed, DeFi seeks to replicate traditional financial services — payments, lending, trading and asset management — directly on blockchain networks, eliminating the need for centralized intermediaries.

DeFi’s growth was once constrained by volatility, regulatory uncertainty and complex on-chain protocols.

However, in recent times governments and major financial institutions are engaging more actively. The rapid advances seen in 2025 have laid the foundation for sustained expansion.

Rising institutional investment reflects growing confidence in on-chain infrastructure, which is approaching centralized systems in reliability and execution.

Still, macroeconomic conditions remain the key driver: credit availability, market depth and retail participation will follow broader liquidity trends. Supportive global liquidity could allow DeFi’s maturing infrastructure to fuel lasting growth.

Conclusion

The cryptocurrency market in 2026 could see a blend of maturation and volatility as the space continues to evolve from speculative playground to mainstream financial infrastructure. 

Ethereum, Solana and other smart-contract blockchains are expanding use cases in DeFi, NFTs and payments, while stablecoins like Tether and institutional products such as ETFs and staking platforms are making crypto more accessible to traditional investors. 

Rising adoption by governments and banks could strengthen confidence in on-chain systems, suggesting that blockchain networks are approaching parity with centralized infrastructure in terms of reliability and execution.

Yet significant risks remain. 

Regulatory uncertainty, particularly around stablecoins and tokenized assets, could constrain growth or introduce compliance costs. Macro factors — global liquidity, interest rates and market sentiment — will continue to dominate price dynamics, meaning crypto investments can remain highly volatile. Retail investor engagement may fluctuate depending on broader economic conditions, while scaling challenges and security vulnerabilities could impact network reliability.

For investors, the opportunity lies in exposure to both native cryptocurrencies, which can benefit from network growth, and ‘picks and shovels’ plays in infrastructure, services and DeFi enablers. However, risk tolerance must be high, as returns are tied not just to adoption, but to macro conditions and regulatory outcomes, making strategic, selective exposure more prudent than blanket investment.