Asset manager 21shares has revised down several of its bullish expectations for the crypto industry in 2026, arguing that while key market infrastructure is improving, weaker price action and slower retail and enterprise participation have dampened momentum.
In its midyear outlook, the firm said sectors ranging from exchange-traded products (ETPs) and stablecoin regulation to tokenization and prediction markets are continuing to mature. Still, it expects that major DeFi security incidents and enterprise adoption that is “slower-than-expected” will make a number of previously planned 2026 targets harder to reach.
Key takeaways
- 21shares says crypto infrastructure is advancing faster than market prices, leaving parts of the industry on track while broader growth is constrained.
- Despite more institutional involvement, 21shares maintains that Bitcoin’s four-year cycle remains intact.
- Prediction markets are highlighted as a standout growth area, with 21shares projecting annual trading volume could exceed $100 billion.
- Crypto ETPs are described as resilient in the long run, even as US spot Bitcoin ETFs have seen about $3 billion in net outflows this year.
- Regulatory clarity in the US is cited as helping convert ETF application backlogs into new launches beyond Bitcoin and Ether.
Bitcoin’s cycle still matters, even with institutions reshaping markets
One of 21shares’ clearest messages is that Bitcoin’s four-year market rhythm continues to play a central role. The firm pointed to Bitcoin’s post-halving behavior and argued that increased institutional involvement has changed how the asset trades during downturns without changing the cycle itself.
21shares said Bitcoin peaked at roughly $126,000 in October 2025 before pulling back sharply, and it has continued to trade in a manner consistent with past post-halving patterns. In its view, institutional ownership has helped limit how violently markets draw down, but the fundamental cyclical behavior has not been disrupted.
The firm’s stance also echoes commentary from former 21shares co-founder Ophelia Snyder, who left the company after its acquisition by FalconX in 2025. In a recent Substack post, Snyder argued that institutionalization makes crypto more entangled with broader financial and macroeconomic drivers. She wrote that the investor base is larger, more institutional, and more connected to the traditional financial system—meaning geopolitical developments and macro shifts can influence crypto pricing more than they once did.
Prediction markets and regulation-driven momentum
While 21shares trimmed some of its broader growth projections, it elevated specific segments where adoption dynamics appear stronger. The firm singled out prediction markets as one of the industry’s best-performing areas, forecasting that annual trading volume could surpass $100 billion this year.
The outlook also ties market development to regulation, particularly in the US. 21shares argued that improving regulatory clarity has helped transform a backlog of crypto ETF submissions into a more continuous stream of new product launches—expanding offerings beyond the initial wave of Bitcoin and Ether-focused vehicles.
In that context, 21shares referenced the Securities and Exchange Commission’s generic listing standards as a mechanism behind the pace of ETF conversions. It also highlighted a single case: Hyperliquid, which the firm described as standing out among newer US spot ETF tracking structures. According to 21shares, US spot ETFs tracking the asset pulled in over $150 million in net inflows in under a month, which it framed as evidence that traditional capital continues to find its way into digital-asset products.
ETPs show durability despite weaker spot inflows
21shares also addressed crypto ETP performance, arguing that short-term flows do not fully reflect investor behavior during weaker market conditions. The firm noted that while US spot Bitcoin ETFs have recorded roughly $3 billion in net outflows this year, the total holdings are still just above 1.25 million BTC—close to an all-time high for Bitcoin holdings inside the category.
That balance matters because it suggests many investors are not rushing to exit after periods of volatility. 21shares said holdings remain supported by investors who either hold through downturns or accumulate strategically even when Bitcoin trades well below earlier highs.
Beyond Bitcoin-only flows, the report’s theme is that the institutional pipeline has not shut off; it has simply become more selective and less reflexive during drawdowns. For market participants, this distinction can be important: outflows can pressure near-term sentiment, but the level of cumulative holdings can point to longer-term positioning rather than capitulation.
Consolidation accelerates across treasuries and scaling ecosystems
Another major thread in 21shares’ midyear outlook is consolidation. The firm said public companies holding crypto on their balance sheets are increasingly diverging, with some smaller treasury players trading below the value of their digital assets. In 21shares’ framing, this gap can intensify pressure on weaker players and make mergers or strategic combinations more likely.
A similar dynamic, the report suggests, is playing out in Ethereum’s layer-2 ecosystem. 21shares said a handful of dominant rollups continue to take market share while many smaller networks struggle to attract meaningful user activity and liquidity. For builders and users, the implication is that network effects and capital efficiency are becoming more decisive differentiators—particularly in a market where growth is harder to come by.
What to watch next
As 21shares moves several 2026 targets out of reach, investors should watch whether regulatory catalysts (especially ETF-related) and segment-specific strength (like prediction markets) can offset the drag from weaker price conditions, security setbacks in DeFi, and slower enterprise adoption.
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