Binance Research 2025 Annual Review and 2026 Theme Outlook

2026-01-15 10:41

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2025 was a milestone year for the cryptocurrency industry, with the market showing significant divergence. The total market capitalization surpassed $4 trillion for the first time, Bitcoin (BTC) reached a new all-time high (ATH), reflecting ongoing institutional adoption, regulatory advancements (especially around stablecoin regulation).

Article Source: Binance Research

The year 2025 was a milestone year for the cryptocurrency industry, with significant achievements, accompanied by notable market divergences. The total market capitalization surpassed $4 trillion for the first time, Bitcoin (BTC) hit a new all-time high (ATH), reflecting ongoing institutional adoption, regulatory progress (especially around stablecoins), and the expansion of regulated investment products. Meanwhile, the market was dominated by high macroeconomic uncertainty driven by monetary policy, trade tensions, and geopolitical risks, leading to sharp price fluctuations and multiple risk-off episodes. This resulted in an extremely wide annual trading range of about 76%, with the total market capitalization fluctuating significantly between around $2.4 trillion and around $4.2 trillion. Despite structural advancements in market access and infrastructure, the crypto market ended the year down by around 7.9%, highlighting that price formation in 2025 was increasingly influenced by macro conditions and traditional financial cycles rather than purely crypto-native adoption drivers.

From a macro perspective, the year was characterized by a "data fog" and volatility, with the market navigating through the backdrop of the new U.S. administration, the "Liberation Day" tariff shock, and economic signals muddled by government shutdowns. While Artificial Intelligence (AI) speculation and the OBBBA fiscal bill drove BTC to new highs in the second half of the year, regulatory delays led to a decoupling of the crypto market from traditional assets towards the end of 2025. However, the outlook for 2026 indicates a distinct "risk-on redux" fueled by the "policy trifecta" of globally synchronized monetary easing, large-scale fiscal stimulus (via cash/tax refunds), and a wave of deregulation. This shift is expected to replace retail-driven speculation with institutional inflows, expanding liquidity-driven growth for cryptocurrencies and potentially receiving support from the U.S. strategic Bitcoin reserve.

Bitcoin exhibited a structural market resilience in 2025 with a clear divergence between market-level strength and on-chain economic activity. BTC hit highs during the year but ended slightly lower, underperforming gold and most major stock indices, while maintaining a market capitalization of around $1.8 trillion and a market dominance of 58–60%. Despite the soft price performance, capital concentration towards BTC intensified: U.S. spot ETFs saw net inflows of over $21 billion for the year, corporate holdings exceeded 1.1 million BTC, equivalent to approximately 5.5% of the total supply. Network security continued to strengthen, with the hash rate surpassing 1 ZH/s and mining difficulty increasing by about 36% year-on-year, indicating sustained miner investments. In contrast, on-chain activity slowed down: active addresses decreased by about 16% year-on-year, transaction volume remained below previous cycle peaks, and speculative token activity only saw brief and unsustainable surges. Overall signals suggest that Bitcoin's liquidity, price formation, and demand are increasingly being realized through off-chain financial channels and holding behaviors, while on-chain activity plays a secondary role, further reinforcing Bitcoin's positioning as a macro financial asset rather than a transaction-driven network.

At the Layer 1 (L1) level, 2025 signaled that pure activity volume is not a reliable indicator of economic relevance, as many networks failed to translate usage into fees, value capture, or sustained token performance. Meanwhile, L1 continued to see consolidation toward a few leading networks. Ethereum maintained its dominance in developer activity, decentralized finance (DeFi) liquidity, and total value, but its on-chain footprint and rollup-driven fee compression weighed on ETH's performance relative to BTC. In contrast, Solana sustained high transaction throughput and daily active users, significantly expanded stablecoin supply, generated meaningful protocol revenue even after normalizing speculative activity, and obtained approval for a U.S. spot ETF, further enhancing institutional accessibility. BNB Chain leveraged mainstream market narratives and a strong retail trading base to drive on-chain spot and derivatives activity, large-scale stablecoin settlements, and real-world asset (RWA) deployments, making BNB the best-performing major crypto asset. A key signal in 2025 was that L1 differentiation increasingly depended on the ability to monetize recurring flows (transactions, payments, or institutional settlements) rather than merely maximizing raw transaction volume.

In 2025, Ethereum's Layer 2 (L2) ecosystem accounted for over 90% of Ethereum-related transaction execution, benefiting from protocol upgrades that expanded blob capacity and reduced data availability (DA) costs. As execution moved off-chain, the key focus was on whether this scale could translate into ongoing usage, fee generation, and alignment with the base layer's economics. From this perspective, significant differentiation emerged: activity, liquidity, and fee generation concentrated on a few optimistic rollups (such as Base and Arbitrum) and specific app chains with clear use cases and excellent user experiences, while many other chains saw a sharp drop in usage once incentives disappeared. Zero-knowledge (ZK) rollups continued to make progress on prover efficiency and decentralization milestones but still lagged optimistic rollups by an order of magnitude in total value locked (TVL) and fee generation. Fragmentation of over 100 rollups, diminishing incentive effects, and uneven decentralization of sequencers remained major limiting factors.

In 2025, DeFi took another step towards "structural institutionalization," focusing on capital efficiency and compliance. TVL stabilized at $124.4 billion, with capital composition shifting significantly towards stablecoins and interest-bearing assets rather than inflationary tokens. A historic milestone was RWA TVL ($17 billion) surpassing DEX, driven by tokenized government debt and stock adoptions. Meanwhile, the U.S. GENIUS Act provided regulatory clarity for stablecoins, pushing their market cap above $307 billion and establishing them as core global settlement infrastructure. Functionally, DeFi had matured into a cash flow-strong industry. Protocol revenue surged to $16.2 billion, comparable to major traditional financial giants, transforming governance tokens into productive "blue-chip" assets. On-chain execution also took the lead, with spot DEX trading reaching a peak of nearly 20% of CEX trading.

2025 was the breakthrough year for stablecoins to truly go mainstream. The total market capitalization surged by nearly 50%, exceeding $3.05 trillion, fueled by the milestone regulatory clarity and institutional influx brought by the GENIUS Act. The daily transaction volume soared by an average of 26% to $3.54 trillion — far surpassing Visa's $1.34 trillion — showcasing the superiority of stablecoins in fast, borderless payments. Momentum came from a new set of heavyweight players: six new stablecoins (BUIDL, PYUSD, RLUSD, USD1, USDf, and USDtB) each broke the $1 billion market cap threshold, bringing forth new competition and real-world utility. These developments collectively laid the foundation for the continued expansion of stablecoins in payment, savings, and fintech use cases.

Consumer crypto entered a decisive era: Blockchain infrastructure had matured, with a sharp focus shifting towards real-world applications and seamless execution. Leading this transformation were new banking and fintech platforms — whether Web2 incumbents or Web3-native projects — rapidly evolving into full-fledged banking services built on the blockchain rails. While crypto gaming and social applications cooled off within the year, the deep integration of blockchain with global payments and fintech established a critical foundation for the next generation of truly native networks designed around transparency and verifiability from the outset. As the industry shifted from infrastructure development to application-driven growth, its core mission also evolved: moving from decentralization for the sake of decentralization to consciously designing trustworthy, verifiable systems to inspire confidence in consumers and institutions.

2025's cutting-edge technologies focused on AI agents, on-chain payments, and decentralized coordination of real-world infrastructure. The most substantial progress was seen in agent-based payments achieving internet-scale availability through the HTTP native settlement standard (reviving the 402 "Payment Required" path), enabling pay-as-you-go models for APIs, data, and automated workflows; by year-end, this track had processed over 100 million payments, with a total transaction volume exceeding $30 million, daily transactions surpassing 1 million, and agents driving over 90% of the traffic. Meanwhile, decentralized Physical AI (DePAI) as an extension of DePIN to coordinate autonomous machines garnered attention, but progress in 2025 was more constrained by data quality, the reality gap, capital intensity, security, and regulatory requirements, rather than token design. In contrast, DeFAI and DeSci remained in the exploratory phase, with limited evidence of persistent economic output compared to agent-native payments and early machine economy use cases.

The hallmark of institutional adoption was embedding crypto into core financial workflows, rather than mere price exposure access. Banks moved closer to mainstream crypto support through lending, indicating greater acceptance of BTC (and selectively ETH) as financial-grade collateral within custody and compliance frameworks, while regulated crypto ETFs continued to expand in scope and structure, reinforcing the ETF's position as the preferred institutional access channel. Tokenized money market funds emerged as a trusted RWA tokenization use case, gaining traction as on-chain cash equivalents due to faster settlement, better collateral liquidity, and auditability. Simultaneously, the scale of Corporate Digital Asset Treasuries (DATs) expanded rapidly, but 2025 highlighted sustainability pressures: leveraged treasury tools underperformed simple interest-bearing ETF alternatives — emphasizing a shift towards infrastructure and revenue-driven adoption rather than mere asset accumulation.

The global crypto regulation is maturing along a divergent yet complementary path: the U.S. advancing innovation through the GENIUS Act (July) establishing the first federal stablecoin framework; Europe implementing the stringent MiCA licensing; Hong Kong solidifying its hub status through stablecoin regulations and tax incentives; Singapore strengthening high standards through tighter compliance and licensing rules (June). Internationally, the commitment to the OECD Crypto Asset Report Framework (CARF) is accelerating, laying the groundwork for standardized tax transparency and cross-border information exchange.

Heading into 2026, we are particularly excited about several key themes and expect significant developments in these areas throughout the year. These themes cover the macro environment with Bitcoin, institutional adoption, policy and regulation, stablecoins, tokenization, decentralized finance, prediction markets, and various narratives and sectors.

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