2026 will see brutal pruning across the digital asset market, as capital consolidates around a small number of dominant players while weaker tokens, protocols, and treasury strategies are acquired or abandoned, according to Pantera Capital.
The warning follows a year in which most crypto assets suffered deep drawdowns despite relative resilience in Bitcoin (BTC), exposing structural weaknesses across the broader token market.
Pantera’s analysis describes 2025 as a year driven by macro forces, positioning, and flows rather than fundamentals, setting the stage for aggressive consolidation in 2026.
Market Structure Collapse Exposed In 2025
Pantera said the October 10, 2025 selloff marked a turning point for crypto market structure.
The liquidation cascade erased more than $20 billion in notional positions, surpassing the scale of forced unwindings seen during both the Terra/Luna (LUNC) collapse and the FTX failure.
Bitcoin ended 2025 down approximately 6%, while Ethereum (ETH) fell 11%. Losses intensified outside the majors: Solana declined 34%, and the broader token universe excluding Bitcoin, Ethereum, and Solana (SOL) fell close to 60%.
The median token dropped 79%, highlighting what Pantera described as one of the most uneven return distributions in crypto history.
Total crypto market capitalization excluding Bitcoin, Ethereum, and stablecoins peaked in late 2024 and declined roughly 44% through the end of 2025, confirming that most altcoins have been in a bear market for over a year.
Bitcoin Dominance Reinforces Capital Concentration
Pantera attributed the divergence primarily to Bitcoin’s singular investment thesis and institutional demand.
Bitcoin continues to benefit from sovereign adoption, ETF inflows, and corporate treasury accumulation, forces largely absent for most tokens.
As of mid-December 2025, 17.9% of Bitcoin supply was held by publicly traded companies, private firms, ETFs, and governments.
This structural demand insulated Bitcoin from the broader market collapse and reinforced its role as the primary beneficiary of institutional crypto exposure.
By contrast, mid- and small-cap tokens lacked standardized access, consistent liquidity, and clear value-capture mechanisms, leaving them vulnerable as speculative capital retreated.
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Value Accrual Failures Accelerate Token Shakeout
Pantera identified unresolved value-accrual questions as a core driver of token underperformance.
Unlike equities, token holders often lack enforceable legal claims on cash flows or governance.
In 2025, several high-profile restructurings, including ecosystems such as Aave (AAVE), TNSR, and AXL, proceeded without direct compensation for token holders, undermining investor confidence across the sector.
During the same period, digital-asset-focused equities outperformed tokens, benefiting from clearer ownership rights and balance-sheet exposure.
On-chain activity also softened in the second half of the year.
While stablecoin supply continued to expand, much of the associated economic value accrued to off-chain, equity-based businesses rather than token-based protocols.
Brutal Pruning Defines 2026 Outlook
Pantera said these pressures set up a decisive reckoning in 2026.
The firm expects consolidation across nearly every crypto subsector, including exchanges, infrastructure, treasuries, and protocols.
Public company digital asset treasuries illustrate the trend.
In 2021, fewer than 10 public companies held Bitcoin.
By mid-December 2025, 164 entities, including governments, held approximately $148 billion in Bitcoin.
Pantera expects weaker treasury strategies to disappear, leaving one or two dominant players per major asset class.
The firm described the coming phase as “brutal pruning,” with most competitors either acquired or forced out as capital and liquidity concentrate globally.
Japan’s Metaplanet and other non-U.S. players signal that this consolidation will extend beyond American markets.
Pantera stated that while 2025 delivered severe dispersion and losses across much of crypto, it also cleared excess leverage, reduced speculative breadth, and compressed valuations, conditions that historically precede the next cycle of durable market leadership.
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