2025 Year-End Crypto Market: This is a 'Cognitive Watershed'
The crypto market at the end of 2025 does not seem lively.
BTC is oscillating around $90,000, sentiment indicators have plunged into extreme fear, leveraged players are being repeatedly liquidated, and short-term holders are experiencing one of the most severe collective capitulations in recent years. Many people are beginning to doubt: has this round already ended?
But the truly important question is not the price, but what changes have occurred in the market structure.
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1. The FOMC has 'landed', the real variables are ahead
The December FOMC brought almost no surprises:
A 25bp rate cut, but the forward guidance is clearly hawkish, with only one rate cut expected in 2026.
This is typical -
Buy expectations, sell facts.
BTC's reaction is not intense, but rather illustrates one thing:
The market already knows the answer.
What truly deserves attention is not this rate cut, but two changes that most people overlook:
First, QT has officially ended.
After the balance sheet shrank from 9 trillion to 6.5 trillion, the Fed has stopped the continuous drawdown.
Second, the RMP plan is set to launch.
Monthly purchases of short bonds at $40 billion are nominally not QE, but essentially targeted liquidity supplementation.
What does this mean?
This means that the market in 2026 is likely not driven by 'emotional bulls', but by a gradual rise in valuation centrality through liquidity structure.
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Two, the new Federal Reserve chair may be more important than a rate cut.
Powell will step down as chair in May 2026, which is a severely underestimated macro variable.
The candidates emerging now, whether Kevin Hassett or Kevin Warsh, are clearly closer to a 'political-growth-oriented' framework rather than Powell's 'extreme caution'.
If a more accommodative chairperson, friendlier to asset prices, emerges in 2026, then:
• RMP may be amplified.
• The rate cut path may accelerate again.
• The valuation logic of risk assets will switch.
This is not a short-term trading signal, but a change in the direction of mid-term asset allocation.
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Three, institutions are no longer asking 'should we enter?', but 'how do we enter?'
What truly ended in 2025 is the discussion of 'will institutions enter crypto'.
The question now has become:
How can institutions participate systematically?
Several obvious trends are forming:
• BTC remains core, but is no longer everything.
It resembles 'digital gold + risk hedging tools' rather than a speculative asset.
• ETH, Solana, stablecoins, and RWA become structural allocations.
Not because of the narrative, but because they are starting to embed into real financial processes.
• Pension funds and sovereign funds are starting to test the waters at low ratios.
A 0.5%-3% allocation is an experiment for them, but a structural increment for the market.
This means:
The future bull market will have smaller fluctuations, but longer trends.
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Four, on-chain data tells you: this is a washout, not a crash.
If you only look at price, it is easy to panic;
But if you look at the on-chain structure, you will see a completely different picture.
• Short-term holders are experiencing the deepest capitulation in nearly two years.
• The reserves of BTC and ETH on exchanges continue to decline
• Long-term holders have not loosened, but are slowly accumulating.
• Multiple valuation indicators are simultaneously entering historical low ranges.
This is not a characteristic of the early bear market, but more like:
A 'forced handover' in the mid-stage of a bull market.
The market is shifting chips from high-leverage, low-patience players to those with more time and capital advantages.
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Five, the choices at year-end are not actually complex.
The current market is not suitable for chasing short-term stimuli.
But it is very suitable for three things:
1. Reduce leverage, preserve liquidity.
2. Build mid-term positions during panic, rather than making a one-time bet.
3. Shift focus from price to structural changes.
If history still holds reference significance, then the 'Christmas-Spring Festival' period is often one of the worst emotional states yet the most optimal risk-return windows.
What really determines your returns in 2026 may not be how much you earn in the next month, but whether you are positioned correctly when others are at their lowest emotional state.
