Institutional Dawn and the End of the Cycle: Interpreting the 2026 Core Narrative and Divergences of Eight Major Top Crypto Institutions

Author: Bruce

Introduction: From the “Wild West” to the “Wall Street Branch”

2026 may be recorded as a watershed moment in cryptocurrency history. If previous bull and bear cycles were dominated by retail sentiment and the Bitcoin halving mechanism—the “Wild West” story—then the latest reports from the eight top crypto institutions collectively point to a new narrative—the formal establishment of the institutional era.

Fidelity (Fidelity) bluntly states in its report that the market is entering a “New Paradigm.” With sovereign reserves (such as legislative efforts in Brazil and Kyrgyzstan) and traditional wealth management institutions entering the space, the “four-year cycle theory” based solely on historical data is becoming invalid. This article will strip away market noise and deeply analyze the certainty opportunities and potential risks seen by these top institutions.

1. Macro Tone: The End of the Four-Year Cycle and New Asset Attributes

For a long time, the crypto market has been accustomed to linear extrapolation around Bitcoin’s four-year halving cycle. However, this logic faces a collective “dimensionality reduction” in the 2026 outlook.

1. Cycle Law Breakdown (Broken Cycle)

Bitwise, Fidelity, and Grayscale agree: the halving effect is diminishing at the margins.

21Shares is even more explicit—“Bitcoin’s four-year cycle has broken.” Their data models show that the introduction of ETFs fundamentally changes demand structures, shifting market drivers from supply-side (miner halving) to demand-side (institutional allocation). When clients of BlackRock and Fidelity start allocating BTC quarterly, the once-appealing four-year halving story loses its allure.

2. Asset Maturity: Desensitization of Volatility

Bitwise makes a bold quantitative prediction: by 2026, Bitcoin’s volatility will first fall below Nvidia (Nvidia). This is not just a numbers game but marks a qualitative shift of Bitcoin from a “high beta tech stock” to a “mature safe-haven asset.”

Fidelity’s qualitative view: Although no specific numbers are provided, Fidelity emphasizes that against the backdrop of high global debt and fiat currency devaluation, Bitcoin will detach from its tech stock correlation and become an independent hedge against currency inflation worldwide.

2. High-Confidence Narrative: Where Is the Capital Flow Going?

After excluding cycle interference, although institutions differ in details, their logic for capital flow is highly aligned.

1. Stablecoins: Challenging Traditional Financial Infrastructure (ACH)

If Bitcoin is digital gold, stablecoins are digital dollars. Many institutions believe stablecoins will no longer be confined to the crypto space but will directly challenge traditional financial channels.

21Shares predicts: The total market cap of stablecoins will surpass $1 trillion in 2026.

Galaxy Digital forecasts: On-chain trading volume of stablecoins will officially surpass the US ACH (Automated Clearing House) network. This means stablecoins will replace traditional interbank clearing systems, becoming a more efficient high-speed money highway.

Coinbase envisions: By 2028, stablecoin market cap will reach $1.2 trillion.

a16z’s view: Stablecoins are evolving into the “basic settlement layer” of the internet, fostering the prosperity of PayFi (Payment Finance), making cross-border payments as cheap and instant as sending emails.

2. AI Payments and KYA: The New Business Civilization

This is the most promising technological variable jointly recognized by a16z and Coinbase, both depicting the same scene from different angles.

Google AP2 and Coinbase x402: Coinbase’s report highlights Google’s Agentic Payments Protocol (AP2) standard and points out that its developed x402 protocol will serve as a payment extension for AP2. This enables AI agents to perform real-time micro-payments via HTTP protocol (HTTP Payment Required), closing the business loop among AIs.

From KYC to KYA: a16z creatively proposes the concept of “KYA” (Know Your Agent). They note that among on-chain transaction entities, the ratio of “non-human” to “human” has reached 96:1. Traditional KYC (Know Your Customer) will evolve into KYA. AI agents do not have bank accounts but can hold crypto wallets, and they will tirelessly buy data, computing power, and storage via micro-payments 24/7.

3. Prediction Markets: A New Vehicle for Free Information

This is a true “institutional consensus track,” with many institutions listing it as a breakout point in 2026.

Bitwise: predicts that the open interest in decentralized prediction markets (like Polymarket) will hit a new high, becoming a “truth source” parallel to traditional news media.

21Shares: provides a specific figure, forecasting that the annual trading volume of prediction markets will surpass $100 billion.

Coinbase’s “Tax-Driven Theory”: offers a very unique perspective—new US tax laws (limiting gambling loss deductions) will unexpectedly push users toward prediction markets. Because prediction markets may be classified as “derivatives” rather than “gambling” for tax purposes, they have a tax advantage.

3. Key Disagreements: Alpha Often Exists in Controversy

Consensus often means prices are already “priced in,” while disagreements imply excess returns (Alpha) or potential risks.

1. Digital Asset Treasury (DAT): The “Great Cleanup” vs. “Red Herring”

Regarding MicroStrategy’s “public company hoarding” model, opinions among institutions are polarized.

The “Great Cleanup” camp (Galaxy Digital & 21Shares):

While 21Shares predicts the total DAT market size will grow to $250 billion, they emphasize that “only a few will survive.” Small DAT companies trading below NAV for a long time will be forced to liquidate.

Galaxy Digital is even more specific: “At least five DAT companies will be forced to sell assets, be acquired, or go bankrupt.” They believe that the blind rush in 2025 led to many companies lacking capital strategies, and 2026 will be the “clearing moment” for the market.

Ignore camp (Grayscale):

Maintains its “Red Herring / Misleading Topic” view, believing that although DAT has high media volume, due to accounting standards and the disappearance of premiums, it will not be a core driver of market pricing in 2026.

2. Quantum Computing: Need to Pay Attention vs. Overthinking

The cautionary camp (Coinbase): in a dedicated chapter titled “The Quantum Threat,” warns that now is the time to initiate migration to post-quantum cryptography standards, and the underlying signature algorithms must begin upgrading to quantum-resistant schemes—an essential for infrastructure security.

The calm camp (Grayscale): considers “quantum threat” a “red herring.” They believe that during the 2026 investment cycle, the likelihood of quantum computers cracking elliptic curve encryption is zero, and investors should not pay “panic premiums” for it.

3. The “Great Cleanup” of L2 (The Zombie Chain Apocalypse)

This is one of 21Shares’ most incisive predictions. They believe most Ethereum Layer 2s will not survive past 2026, becoming “zombie chains.”

Reason: liquidity and developer resources exhibit a strong Matthew effect, ultimately concentrating on top chains (like Base, Arbitrum, Optimism) and high-performance chains (like Solana).

Data support: Galaxy Digital predicts that “the ratio of application layer revenue to L1/L2 network layer revenue will double by 2026,” validating the “Fat App Thesis”—value is flowing from infrastructure to super apps with real users.

4. Non-Consensus Predictions: Overlooked Corners

Besides mainstream views, some institutions have proposed unique “cold” predictions worth noting:

Privacy Track’s Return (Galaxy Digital & Grayscale): Both are optimistic about privacy, with Galaxy Digital predicting the total market cap of privacy tokens will surpass $100 billion. They also highlight Zcash ($ZEC)'s rebound, believing privacy will be re-priced from a “crime tool” to an “institutional necessity” (Privacy as a Service).

Revival of Regulated ICOs (21Shares): 21Shares believes that with the implementation of regulatory frameworks (such as the US Digital Asset Market Clarity Act), “regulated initial coin offerings” will return as a legitimate capital market financing tool.

Excess Returns of Crypto Stocks (Bitwise): predicts that crypto-related stocks (such as mining companies, Coinbase, Galaxy) will outperform the “Magnificent 7” traditional tech giants.

Conclusion: Survival Rules for Investors in 2026

Based on the outlooks of these eight major institutions, the market logic in 2026 has undergone a fundamental change. The simple pattern of “blindly buying and waiting for halving” is a thing of the past.

For investors, the new survival rules can be summarized in three dimensions:

Embrace leading players and real yields: In the brutal cleanup of L2 and DAT, liquidity and capital structure are survival indicators; focus on protocols that generate positive cash flow.

Understand “technical content”: From Google AP2 standards to KYA, upgrades in technological infrastructure will bring new Alpha. Pay attention to the implementation of new protocols like x402.

Beware of false narratives: In the eyes of institutions, there are golden opportunities and “red herrings.” Distinguishing which are long-term trends (e.g., stablecoins replacing ACH) and which are short-term hype will be key to winning in 2026.