2026 Crypto Market: The Truths and Lies Hidden by Consensus

The current valuation of the US stock market has already reached the levels seen at the peak of the 1999 internet bubble. The price-to-earnings ratio has hit 40.5x, even surpassing the 32x before the 1929 crash. Using Warren Buffett’s favored metric, the “total market cap to GDP ratio,” the current figure is 230%, which is 77% above the long-term trend, compared to only 130% before the 1929 collapse.

Perhaps this time really is different. Some call it a “devaluation trade,” where global inflation dilutes debt. But the statement “devaluation trade is not real” itself may be a “non-explicit lie.” If it were true, the relevant curve should remain stable.

A key data point is the ratio of the Nasdaq 100 index to M2 money supply, which has risen to a historic high of 0.027. Since the 2022 bear market low, this ratio has doubled. During the same period, the Nasdaq index increased by 141%, while M2 supply grew by only 5%. The speed of stock price increases is 28 times the rate of new money creation.

Of course, artificial intelligence may be transformative enough to invalidate traditional valuation metrics. But combined with macro uncertainties, inflation, and geopolitical conflicts, widespread anxiety is real. People crave stable lives, reliable property ownership, and income opportunities. Therefore, most prefer investing in stocks and equities.

In this environment, few are willing to allocate their entire portfolio to high-risk altcoins. But $BTC’s outlook might be different. I see it as a “hedging asset,” used to offset macro uncertainties, international turmoil, and potential fiat currency devaluation.

This aligns with the “non-explicit truth in 2025” I mentioned last year. Many still see $BTC as a “high-risk asset,” believing it only rises in macro-stable times. This narrative divergence is a key factor suppressing its price. Market balance requires panic-driven holders to concede to “digital gold” buyers.

The risk is that if the stock market crashes, all asset classes could decline. Given the current macro bubble, I want to outline trends that could shape the industry by 2026, and the “truth versus lies” framework is an excellent entry point. The primary point is: cryptocurrencies are currently trapped within the macro bubble.

I adopt the analytical framework proposed by Peter Thiel and adapted by Matti at Zee Prime Capital. It distinguishes “explicit” and “non-explicit” truths and lies. The “non-explicit” parts are harder to identify but often contain the best trading opportunities. If your insights only stay within the “explicit” realm, you likely lack unique value.

An explicit lie is: retail investors will return and save the market. The crypto community still expects “the masses.” But in reality, retail investors have suffered heavy losses through multiple market swings, and current macro anxiety is even greater. From 2017’s ICOs, 2021’s NFTs, to 2024’s Meme coins, each wave is essentially “value plundering.”

The next wave of capital is more likely to come from institutions. They won’t invest in “air projects,” but prefer tokens with “dividend-like attributes,” clear product-market fit, and regulatory clarity. Some predict that tokens based on practical utility have failed, and governance voting rights no longer attract investors.

I worry that if tokens cannot deliver value, institutions might bypass tokens altogether and directly acquire equity in projects. The conflicts of interest between token holders and equity holders are already evident. If value flows into equity rather than tokens, we are merely reconstructing the traditional financial system. This is a core issue to watch in 2026.

Another explicit lie is: airdrops are dead. Airdrops have historically been one of the easiest ways to profit in crypto. For genuine long-term users, returns remain attractive. In 2025, airdrops in the new financial sector will gradually resume. If the community widely believes “airdrops are dead,” competitive pressure will decrease.

The third explicit lie is: Meme coins are over. From a speculative perspective, profiting from Meme coins requires keen market sentiment analysis. They don’t need tokenomics research, are highly volatile, and have unique appeal. Public chain tokens or governance tokens favored by institutions don’t provide this “thrill.”

“Financial nihilism” persists, and regulation is unlikely to fully ban Meme coins. If a bull market returns, Meme coins will make a comeback. Influencers have strong incentives to promote them, and retail investors’ desire for “thousandfold gains” has never disappeared.

An explicit truth is: quantum risk is real. Risks exist on both practical and perceptual levels. Even if there are no real quantum computers cracking $BTC wallets, news of a “breakthrough” from related companies could trigger panic selling, causing prices to plummet.

In such scenarios, capital might shift toward blockchains with stronger quantum resistance. $ETH has included “quantum resistance” in its roadmap. Upgrading $BTC’s signature algorithms via hard forks could cause community splits. New chains might market themselves around “post-quantum cryptography.”

The second explicit truth is: prediction markets are just beginning. In 2024, prediction markets have become mainstream; by 2026, they will further expand in scale, scope, and intelligence. They are shifting from broad topics to more specific, event-based outcomes.

The number of contracts will increase, with AI agents scanning information to detect trading signals. The core challenge is: “Who determines the truth of events?” As markets grow, settling bets will become difficult. Future prediction markets may need to adopt “decentralized governance with AI oracle” models to resolve disputes.

The third explicit truth is: tokenization of real-world assets (RWAs) will dominate crypto growth. Unlike speculative hype, RWAs represent a long-term trend after institutional capital finds “product-market fit.” Predictions for RWA scale by 2030 vary greatly—from conservative estimates of $2-4 trillion to optimistic forecasts of $30 trillion.

Optimistic forecasts suggest RWAs could surpass the current total market cap of cryptocurrencies. BlackRock and its CEO Larry Fink are actively promoting RWA development, comparing it to “the internet era of 1996.” His core view is that all assets can be tokenized, which will revolutionize the investment industry.

The core advantages of RWAs include efficient collateral utilization, DeFi composability, 24/7 settlement, and programmable compliance. How to profit from this? Potential directions include: dominating the oracle space with $LINK; providing yield or fixed income via $PENDLE; and holding $ETH, which carries much of the on-chain RWA value.

A non-explicit lie is: all clear regulations are beneficial. When exchanges cheer regulatory policies, consider whether this truly benefits ordinary investors. For example, the GENIUS Act explicitly bans interest-bearing stablecoins. But this could be a potential boon for DeFi, as stablecoin holders might shift to protocols like Aave for yield.

Regulation could accelerate DeFi adoption. But I worry that regulation might further restrict industry innovation, ending the “high-risk speculative era.” In the EU, the Markets in Crypto-Assets Regulation (MiCA) already bans major exchanges from trading USDT, and compliance costs are very high for startups.

The ultimate outcome may be market concentration among top players, leading to monopolies. Some regulation can bring certainty, but others may limit core crypto advantages. When new laws emerge, using AI tools to analyze their true impact is advisable.

The second non-explicit lie is: privacy is just a short-term narrative. The crypto community is excited about $XMR, $ZEC’s rise. But the real privacy opportunity lies in infrastructure for institutions, not privacy coins. Privacy coins face bans worldwide.

Institutional demand for privacy is urgent. The proportion of on-exchange trading in US stocks has fallen from about 70% in 2010 to nearly 50% in 2025. On-chain transparency exposes institutional trading strategies. Professional institutions are reluctant to deploy complex strategies on public blockchains.

Against this backdrop, more attention is turning to Canton blockchain. US custodial trust and settlement firms announced plans to tokenize US Treasuries on Canton in Q2 2026. Canton is “the first open blockchain designed specifically for institutional finance with privacy features.”

Its supporters are traditional financial giants. Privacy is not a “short-term narrative,” but a core need for institutional entry. Public chains like $ETH and $SOL face competition from Canton. But $ETH is also actively developing privacy features; Vitalik explicitly lists “lack of privacy” as a “structural flaw” today.

The third non-explicit lie is: ICO resurgence can fix the token issuance model. ICO 2.0 platforms claim to make issuance fair, terms equal, and participation democratic. But in reality, they often require KYC, excluding most of the global population. The so-called “reputation score” tends to favor insiders and KOLs.

Token issuance methods keep evolving, but value always flows to two groups: those controlling transaction resources, and those who understand the rules of the game. ICOs reflect genuine demand, but retail entry prices can be 10 to 50 times higher than seed investors, and unlocking tokens can cause sell pressure.

A non-explicit truth is: $ETH Layer1 is expanding capacity directly. Most still think of 2020. But in fact, $ETH Layer1 is “quietly scaling.” After Fusaka upgrade, gas limits have increased. By mid-2026, further upgrades are expected.

With ZK-EVM tech, $ETH Layer1’s TPS can reach thousands, maintaining full decentralization. Increased transaction activity on Layer1 will lead to more fee burning, strengthening $ETH’s deflationary pressure. The “ultrasound money” narrative persists.

Layer2 will still dominate “ultra-low-cost transactions,” but the narrative that “all business must permanently migrate to Layer2” will fade as Layer1 scales. $ETH’s scaling is “stepwise,” with no single “hype point,” making it easy for markets to overlook.

The second non-explicit truth is: the four-year cycle no longer exists. I believe $BTC and the entire industry have fundamentally changed enough to escape past halving cycles. $BTC is increasingly seen as a macro asset, influenced by broader macro forces.

Miners’ influence wanes because daily issuance is about 450 $BTC, while BlackRock’s $BTC ETF can absorb this supply quickly. The “halving supply shock” narrative is invalid. ETFs also reduce volatility, and institutional trading differs from retail.

Overlaying $BTC price with “global M2 money supply” shows a very high correlation. $BTC often lags gold by 60-150 days. The “$BTC chasing gold” trading logic will have a much greater impact than the traditional 4-year cycle.

The third non-explicit truth is: digital asset vault companies find crypto more beneficial than harmful. Some believe that the buying activity of DATs has ended and can no longer support $BTC prices. But most DATs have low leverage, so forced liquidations during downturns are unlikely.

DATs may become a long-term fixture in crypto, but by 2026, they won’t be the main source of new demand nor the primary source of sell pressure. For $ETH, DAT holdings already surpass those of $ETH ETF. Unlike $BTC DAT, $ETH treasury actively stakes assets or participates in DeFi.

$BTC, $SOL, and $ETH all have ETFs, competing with DATs. But most altcoins are too risky for ETFs, making DATs the “IPO moment” for altcoins—institutions can legally and simply deploy capital into altcoins this way. This will shift user attention and funds toward assets with higher upside potential.

Overall, if $BTC DAT’s impact remains moderate, and they continue staking and participating in DeFi, and if altcoin DATs expand into quality assets, then 2026 could be a net positive for crypto. Of course, in downturns, DATs will increase sell-offs, but that’s nothing new.

The fourth non-explicit truth is: “All crypto card companies will eventually disappear.” This view argues that crypto cards rely on Visa/Mastercard, are easily replicable, and their centralized KYC runs counter to crypto’s goals. Once direct wallet payments become widespread, cards will be obsolete.

Evidence already shows stablecoins can support direct peer-to-peer payments. I believe two types of companies will survive: one providing “crypto-backed lending platforms,” and another transforming into “new banking apps” with their own payment networks.

But more likely, platforms like Revolut will directly support stablecoin payments, while most native crypto payment solutions will be phased out. Once stablecoin payments become mainstream, crypto cards will lose their market. Current crypto card payments are likely to pivot toward competing with new financial applications. Those that fail to adapt will vanish.

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