Why Crypto Underperformed in 2025, and What It Could Mean for 2026

Total crypto market cap in USD in 2025 – TradingView

Liquidity entered the system — but not all liquidity flows into crypto equally.

3️⃣ Regulatory and Political Overhang

Despite progress, crypto in 2025 remained under:

• Ongoing regulatory scrutiny
• Political weaponization of narratives
• Uncertainty around taxation and compliance

This discouraged short-term allocation even in an otherwise bullish macro environment.

The Two Scenarios Heading Into 2026

As 2025 closes, the market is left with two realistic scenarios.

Scenario 1: Something Structural Broke in Crypto

In this scenario:

• Crypto no longer reacts to global liquidity as it once did
• Capital permanently repriced crypto risk lower
• Bitcoin and Ethereum lose their role as high-beta liquidity assets

This would imply a slower, more utility-driven future with muted cycles — and much lower speculative upside.

Scenario 2: Crypto Is Lagging — Not Failing

The alternative view is simpler:

Crypto is late, not broken.

Historically:

• Crypto often lags macro liquidity by months
• Major rallies tend to follow frustration and disbelief
• Underperformance often precedes violent catch-up moves

If this pattern holds, 2025 could be remembered as the setup year, not the failure.

Crypto Price Prediction 2026: Catch-Up or Capitulation？

If crypto catches up in 2026, the ingredients are already there:

• Expanding global liquidity
• Scarcity narratives returning
• Structural supply constraints in Bitcoin
• Renewed risk appetite once uncertainty fades

In that case, 2026 could see:

• A delayed but aggressive crypto rally
• Bitcoin reclaiming leadership among risk assets
• Ethereum and select altcoins outperforming late in the cycle

If not, the market shifts permanently toward lower volatility and slower growth — a very different crypto era.