The three major recursive improvement factors in the 2025 cryptocurrency market: the triangle of institutions, infrastructure, and regulation

One-time Structural Shift: From Personal Sentiment to Institutional Deployment

The most fundamental change in the cryptocurrency market in 2025 is that the main actors of capital have changed. In the past, the prices of Bitcoin and Ethereum were driven by community enthusiasm, SNS narratives, and FOMO emotions. They exhibited nonlinear volatility characterized by sudden surges and rapid crashes. However, the situation changed after the approval of spot Bitcoin ETFs.

As institutional capital entered systematically, the market’s decision-making power shifted from individual investors to pension funds, sovereign funds, and large hedge funds. Their characteristics are clear. First, they trade infrequently and hold for long periods. While individuals react to news and buy or sell frequently, institutions approach with mid- to long-term strategies through investment committees. Second, they are extremely sensitive to macro variables. When expectations of interest rate hikes emerge, institutions recalculate yields and adjust their positions.

The results are clear. The daily volatility of Bitcoin and Ethereum has significantly decreased compared to 2024. A “static order” closer to traditional assets has begun to form. Extreme fluctuations caused by narrative shocks have disappeared, and prices are returning under the constraints of institutional capital.

However, the decline in volatility does not mean the end of risk. The source of risk has shifted. From emotional shocks to interest rates, liquidity, and global risk appetite. By 2026, analyzing only on-chain indicators and narratives will be insufficient. It is necessary to track institutional capital flows, portfolio structures, and macro transmission channels together.

The Second Innovation: Stablecoins as Infrastructure and Yield Curves on-chain

In 2025, the cryptocurrency market evolved from a “high-risk asset trading platform” to a “functional dollar network.” Stablecoins are at the center of this transformation.

In the past, stablecoins were merely a refuge from volatility and a means of transaction mediation. By 2025, they became the standard for almost all transactions. Centralized exchanges, decentralized protocols, derivatives, cross-border payments—stablecoins form the fundamental trajectory of capital flow. The annual on-chain transaction volume has reached tens of trillions of dollars, surpassing the payment systems of most countries.

At the same time, real-world asset tokenization(RWA), especially on-chain U.S. Treasuries, has moved beyond simple concepts to become auditable entities. Assets with clear cash flows, well-defined maturity structures, and direct links to traditional risk-free rates are being built on blockchain for the first time. For institutions, this means “they can earn on-chain yields without bearing the high volatility of cryptocurrencies.”

However, in mid-2025, a series of collapses of yield-bearing stablecoins and algorithmic stablecoins occurred. The fundamental cause was one: recursive collateral and hidden leverage. Products promising high yields relied on complex DeFi strategies and liquidity mismatches. Risks were not properly priced, yet these assets were treated as “cash-like assets.”

This event left a clear lesson for the market: the stability of stablecoins depends not on “how stable they are” but on “whether collateral transparency and auditability are ensured.” In 2026, the differentiation in quality among stablecoins and RWAs will accelerate. Products with high transparency, low risk, and strong regulation will be adopted at lower capital costs, while those relying on complex strategies will become marginalized.

The Third Pillar: Regulatory Clarity Reshapes Industry Structure

The key question in the past crypto market was simple: “Can this industry exist?” Regulatory uncertainty itself was a systemic risk. Institutional capital demanded additional risk premiums, and business models were optimized for regulatory evasion.

In 2025, the game changed as major countries in Europe and Asia-Pacific provided relatively clear regulatory frameworks. The question shifted: “Can we scale within the regulatory boundaries?”

Regulatory clarity = reduced uncertainty = lower barriers for institutional entry. As stablecoins, ETFs, management services, and trading platforms became part of clear regulatory scopes, institutions could evaluate cryptocurrencies within existing risk management frameworks. This does not mean regulations have loosened but become more predictable.

A more significant change is the concentration of industry structure. Token issuance shifted from disorderly P2P sales to regulation-based platforms. As issuance, disclosures, lock-up periods, and distribution become more standardized, a new form of “online capital markets” is emerging.

This also impacts asset valuation methods. In the past, indicators like narrative strength, user growth, and TVL were central. By 2026, regulatory capital occupancy, legal structure stability, reserve transparency, and access to regulatory channels will become new evaluation variables. The market has begun to assign “institutional premiums” and “institutional discounts.” Projects with high regulatory efficiency will be funded at lower capital costs, while models relying on regulatory evasion face valuation compression risks.

Three Investment Frameworks for 2026

Summarizing the structural changes in 2025, there are three:

• Capital Flows: Personal → Institutional (Tracking macro sensitivity of institutions)
• Asset Basis: Narrative → On-chain dollar system (Monitoring stablecoin + RWA quality differentiation)
• Regulatory Environment: Gray zone → Normalization (Institutional competitiveness reflected in evaluation)

The winners of this new paradigm are not projects that tell “the best story.” Instead, infrastructure and assets that can continuously expand under the constraints of capital, yield, and rules will succeed. Research in 2026 should be reorganized around these three axes.