Source: Yellow Original Title: Pantera warns that 2026 will bring a brutal pruning in the crypto world

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The market in 2026 will face a harsh correction

According to Pantera Capital, the digital asset market in 2026 will undergo a severe correction, with capital concentrated in a few dominant players, while weaker tokens, protocols, and financial strategies will be acquired or abandoned.

This warning stems from the market performance in 2025. Although Bitcoin showed relative resilience, most cryptocurrencies experienced significant declines, exposing structural weaknesses in the token market.

Pantera’s analysis describes 2025 as a year driven by macro forces, positions, and capital flows rather than fundamentals, laying the groundwork for aggressive consolidation in 2026.

The collapse of the crypto market structure in 2025 exposed vulnerabilities

Pantera states that the large-scale sell-off on October 10, 2025, marked a turning point in the crypto market structure.

The cascade of liquidations wiped out over $20 billion in nominal positions, surpassing the forced liquidation scale observed during the Terra/Luna collapse and FTX bankruptcy.

Bitcoin fell about 6% by the end of 2025, while Ethereum declined 11%. Losses extended beyond the broader market: Solana dropped 34%, and excluding Bitcoin, Ethereum, and Solana, the wider token universe lost nearly 60%.

Median tokens plummeted 79%, highlighting one of the most unequal return distributions in cryptocurrency history as described by Pantera.

The total market capitalization of cryptocurrencies excluding Bitcoin, Ethereum, and stablecoins peaked at the end of 2024 and declined by about 44% by the end of 2025, confirming that most altcoins have been in a bear market for over a year.

Bitcoin’s dominance reinforces capital concentration

Pantera attributes this divergence mainly to Bitcoin’s unique investment thesis and institutional demand.

Bitcoin continues to benefit from sovereign adoption, ETF inflows, and corporate treasury accumulation—forces that are largely absent in most other tokens.

By mid-December 2025, 17.9% of Bitcoin supply was held by publicly listed companies, private firms, ETFs, and governments.

This structural demand isolates Bitcoin from the broader market collapse and reinforces its role as the primary beneficiary of crypto institutional exposure.

In contrast, small- and mid-cap tokens lack standardized access, consistent liquidity, and clear value capture mechanisms, making them vulnerable when speculative capital exits.

Failure to capture value accelerates token cleanup

Pantera identifies unresolved issues around value capture as a key factor behind poor token performance.

Unlike stocks, token holders generally lack enforceable legal rights to cash flows or governance.

In 2025, several high-profile reorganizations, including those of ecosystems like Aave, TNSR, and AXL, advanced without direct compensation to token holders, undermining investor confidence across the industry.

Meanwhile, stocks focused on digital assets outperformed tokens, benefiting from clearer ownership rights and exposure to corporate balance sheets.

On-chain activity also weakened in the latter half of the year.

While stablecoin supply continued to grow, most of the associated economic value accumulated in off-chain equity businesses rather than in token-based protocols.

Brutal correction defines the outlook for 2026

Pantera notes that these pressures set the stage for decisive adjustments in 2026.

The firm expects nearly all crypto sub-sectors to undergo consolidation, including exchanges, infrastructure, treasuries, and protocols.

The digital asset treasuries of publicly listed companies illustrate this trend.

In 2021, fewer than 10 listed companies held Bitcoin on their balance sheets.

By mid-December 2025, 164 entities (including governments) held about $148 billion worth of Bitcoin.

Pantera predicts that weaker treasury strategies will disappear, leaving one or two dominant players in each major asset class.

The firm describes the next phase as a “brutal correction,” where most competitors will be acquired or pushed out of the market as capital and liquidity concentrate globally.

Japanese Metaplanet and other non-U.S. participants indicate that this consolidation will extend beyond North American markets.

Pantera states that although 2025 brought significant decentralization and losses across much of the crypto universe, it also eliminated excessive leverage, reduced speculative scope, and lowered valuations—conditions that historically precede the next lasting market leadership cycle.