Pantera Capital says 2025 was effectively a full-scale bear market for most crypto tokens, even if the year appeared choppy at the surface.

In its Navigating Crypto in 2026 report, the firm noted that non-bitcoin tokens have been in a sustained decline since December 2024, pressured by weak value capture, slowing on-chain activity, and declining retail flows. Excluding bitcoin (BTC $88,654), ethereum (ETH $2,942), and stablecoins, total market capitalization fell roughly 44% from late-2024 highs through the end of 2025.

The downturn pushed sentiment and leverage to levels historically associated with capitulation, where holders sell in panic to limit further losses. Bitcoin ended the year down about 6%, while ETH fell 11%, SOL dropped 34%, and the broader token market tumbled nearly 60%, with the median token down roughly 79%. Pantera described 2025 as an exceptionally narrow market, with only a small fraction of tokens producing gains.

The firm said macro shocks, market flows, and structural factors dominated price action. Repeated whipsaws tied to policy shifts, tariff threats, and changing risk appetite culminated in an October liquidation cascade that erased more than $20 billion in notional positions—larger than the losses from Terra/Luna and FTX.

Structural challenges compounded the decline, as many governance tokens lack clear legal claims to cash flows or residual value, helping digital asset equities outperform. On-chain metrics such as fees, application revenue, and active addresses also weakened, even as stablecoin supply continued to expand.

Pantera said the drawdown now mirrors previous crypto bear markets, setting the stage for a potentially stronger 2026 if fundamentals stabilize and market breadth returns. Rather than offering price targets, the firm frames next year as a capital-allocation shift, favoring bitcoin, stablecoin infrastructure, and equity-linked crypto exposure.

Partner Paul Veradittakit said 2026 will likely be defined by institutional adoption, including real-world asset tokenization, AI-powered on-chain security, bank-backed stablecoins, consolidation in prediction markets, and a wave of crypto IPOs, rather than a broad speculative token rally.