Surviving the Darkest Moment of 2025: What Will Enable Crypto's Comeback in 2026?
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Surviving the Darkest Moment of 2025: What Will Enable Crypto's Comeback in 2026?
Delve into the six behind-the-scenes trends shaping the crypto industry, revealing what could change by 2026.
Navigating Web3 tides with focused insightsAuthor: 0xJeff
Translation: TechFlow
2025 has been a challenging year—despite the U.S. president’s promise to make America the global hub for crypto and artificial intelligence, the crypto industry has faced a difficult year.
Since Trump took office in January this year, the crypto space has experienced one tense moment after another, with the October flash crash particularly paralyzing the entire industry.
Although the ripple effects of the flash crash have not yet fully dissipated, favorable macroeconomic conditions and tailwinds within the industry are paving the way for a strong quarter and optimistic outlook in 2026.
In this article, we will dive into six behind-the-scenes trends shaping the crypto industry, revealing what might unfold in 2026.
Let’s begin our exploration ↓
1. Prediction Markets = Product-Market Fit for Crypto Options
The prediction market (PM) sector recently set a new all-time weekly trading volume record, surpassing $3 billion for the first time just two weeks ago.
We are witnessing rapid expansion in the scope of prediction markets—from politics, sports, esports, pop culture, trending topics, to macroeconomics, cryptocurrencies, finance, corporate earnings, and technology—the coverage is becoming increasingly broad.
Currently, platforms like @Polymarket and @Kalshi position themselves as general-purpose prediction markets covering all exciting domains. Meanwhile, emerging prediction markets such as @trylimitless and @opinionlabsxyz focus on niche areas: Opinion specializes in macroeconomics, offering markets on interest rates in the U.S., EU, and Japan; Limitless focuses on crypto markets, covering a wider range of crypto assets across different timeframes.
Crypto options were popular during the last bull run in 2021 but lost momentum due to various challenges, primarily poor user interface/user experience (UI/UX) and lack of liquidity.
Prediction markets address these shortcomings by offering intuitive and user-friendly interfaces that allow anyone to place bets easily without financial expertise. Additionally, they effectively attract capital inflows by creating engaging markets where anyone can become a market maker or participant (betting "Yes" or "No"). Instead of struggling to understand Greeks and complex option jargon, users simply buy "Yes" or "No" shares.
Like options, people also use prediction markets as tools to hedge risks on core assets. For example:
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Hold a large amount of airdropped tokens but want to hedge risk? Buy "No" shares in the relevant market.
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Overexposed to long positions in your portfolio? Buy "No" shares in macroeconomic or Bitcoin markets.
Got it?
Prediction markets essentially repackage options into more accessible products—a platform anyone can participate in and benefit from. One of the key beneficiaries is machine learning/prediction teams.
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Prediction Markets: The Perfect Testing Ground for Machine Learning Teams
Teams like @sportstensor, @SynthdataCo, @sire_agent, and @AskBillyBets are aggressively optimizing their signal performance in prediction markets.
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Sportstensor acts as a liquidity layer on Polymarket, allowing any prediction market trader to join prediction competitions and contribute signals. Top-performing signals receive Alpha Token rewards, and these leading signals are further used to refine Sportstensor's predictive models for future commercialization.
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Synth positions itself as a high-frequency trading (HFT) prediction market hedge fund, using its predictive signals to forecast price movements of crypto assets within 1-hour and 24-hour windows and placing bets accordingly. Preliminary data shows a 500% return in one month ($3,000 → $15,000).
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Sire is building an Alpha Vault, using the Sire model driven by SN44 Score data to bet in sports markets. Initial results show returns exceeding 600%. This is currently the best-performing prediction market DeFi vault product on the market and is about to launch publicly.
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Billy offers analytics and automated betting based on Billy’s Betting Insights (BCS). The team is exploring the advantages of providing liquidity for Parlays-style bets on Kalshi and plans to scale this strategy, expanding the vault size (future profits will be returned to token holders once the vault reaches scale).
The appeal of prediction markets lies in providing an arena for multiple AI models to engage in "Darwinian competition," enabling machine learning teams to validate their strategies in real-world environments.
Synth, Sire, and Billy can all participate in Sportstensor’s competitions and may soon join @aion5100's @futuredotfun-initiated "Battle of Markets" event, which will take place on Polymarket and Kalshi.
Even cooler, Polymarket is teasing the launch of Poly Token, while emerging prediction markets use token incentives to attract liquidity and trading volume. Machine learning teams can not only identify pricing inefficiencies and arbitrage opportunities but also "mine" tokens as rewards.
Does this remind you of the early days of Hyperliquid?
History is repeating itself, but this time the protagonist is prediction markets, not perpetuals (Perps).
2. The Battle for New-Gen Neobanks Begins
We are witnessing a transformation: mainstream Web2 startups and large enterprises are launching their own L1/L2 blockchains and integrating stablecoin payment rails to serve users directly. At the same time, crypto-native projects are penetrating real-world financial services.
Teams like @ether_fi, @useTria, @AviciMoney, and @UR_global have already launched non-custodial crypto payment cards, allowing users to spend their crypto balances offline directly.
In just one year, this market has transformed from blue ocean to fiercely competitive battlefield, with 20 to 30 major players now vying for the same group of crypto users.
Current Points of Differentiation:
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Cashback/Reward Rates
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Tria stands out here with the highest reward rate, though it requires an annual subscription fee.
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FX, Transfer, and ATM Fees
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Platforms are competing intensely on these fees.
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Additional Benefits
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Including travel perks, hotel membership tiers, airport lounges, and event tickets.
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Yield/DeFi Integration
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Offering yield on idle funds, lending-to-spend features, etc. EtherFi excels in this area with high yield and lending capabilities.
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Nevertheless, most products still share similar underlying structures. They rely on partner banks/issuers holding Visa/Mastercard licenses, positioning the payment card as a front-end user acquisition tool rather than a true neobank.
Due to the following reasons, most current crypto payment card projects remain limited:
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Compliance is controlled by issuer/bank partners, not the project itself
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User balances are virtual accounts, not full banking accounts
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Most services stop at “crypto payments,” lacking fiat withdrawals or full banking functionality
This model remains acceptable in the market since all projects operate under similar constraints. However, as competition intensifies, projects capable of becoming true banks may gain a decisive edge.
Those able to control their own compliance and regulatory frameworks will offer more comprehensive services, including genuine bank accounts, multi-currency fiat on/off ramps, and seamless integration between crypto and traditional financial payment rails.
In this regard, UR (from the Mantle ecosystem) is ahead of the curve. It currently operates under regulation by the Swiss Financial Market Supervisory Authority (FINMA), holds a Swiss banking license, supports seven fiat currencies, and bridges real-world and crypto financial services. Users can freely switch between crypto and fiat assets and transfer funds across the seven currencies via traditional banking channels.
3. Killer Apps and Use Cases in Crypto Are Becoming Clearer
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Trading
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Predicting
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DeFi Yield Farming
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Stablecoins
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Asset Tokenization
We’ve evolved from centralized exchanges (CEX) to spot decentralized exchanges (Spot DEX), then to perpetual DEXs (Perp DEX), with Hyperliquid now emerging as a leader in this space.
The ultra-speculative launchpad model pioneered by Pumpdotfun sparked a wave of launchpad mania around various narratives.
Prediction markets have achieved "escape velocity," reaching mainstream audiences for the first time. This viral spread hasn't been seen since the NFT boom (when people mocked those "ugly JPEGs"). But this time, user attitudes have shifted—they genuinely love prediction markets.
DeFi is gradually expanding into Wall Street through structured yield products, interest-bearing instruments, stablecoins, real-world assets (RWA)/decentralized physical infrastructure networks (DePIN), and asset tokenization. People are realizing they can not only own a piece of the future but also earn yield on these assets and even borrow against them.
All key crypto use cases are being amplified. CEXs are beginning to roll out super-app wallet functionalities—platforms like Base App, Binance, and OKX are enhancing their wallets to make them easier for average users. Meanwhile, ICOs (Initial Coin Offerings) are making a comeback—Coinbase launched the first Monad ICO, and other launchpads (like Legion and Kaito) are gradually gaining more user traction.
4. Crypto AI Finds Early Product-Market Fit (PMF)
The early days of crypto AI were filled with low-quality projects—AI meme coins and GPT-wrapped products claiming to be "AI agents" have largely faded.
Now, blockchain payment rails and stablecoins are enabling commercial transactions between agents. Meanwhile, cryptographic technologies such as Trusted Execution Environments (TEE) and zero-knowledge proofs (zk proofs), combined with token economic mechanisms (incentives and penalties), are making AI systems verifiable and deterministic.
Supportive tech stacks (such as x402, ERC-8004, programmable wallets, metering/billing frameworks, verifiable inference/computation, and other extensions) are laying the foundation for trusted, continuous, and secure AI-human collaboration. These infrastructures aim to enable seamless transactions and cooperation between AI and humans anytime, anywhere, while implementing safeguards against AI hallucinations or runaway behavior.
Meanwhile, Darwinian AI is emerging as a compelling meta-layer model, evolving AI/intelligent agents through gamified competition, improving signal quality, and enhancing performance via real-world incentives. So far, the most successful applications are concentrated in trading and prediction signals—areas highly aligned with crypto’s core DNA.
An increasing number of ecosystems are adopting this Darwinian model, using token incentives to attract developers, reward contributors, and subsidize R&D for high-quality AI products. Although still early, the Bittensor ecosystem shows promising momentum, with its top subnets performing exceptionally well.
However, despite technological progress and demonstrated product-market fit, the token performance of most crypto AI projects has lagged, currently trading 30% to 90% below their TGE (Token Generation Event) prices—even though they’ve delivered robust infrastructure and tangible utility.
5. DeFi Enters the “Dynamic DeFi Era”
DeFi has firmly established itself as a core pillar of the crypto industry, with total value locked (TVL) in decentralized exchanges (DEX), lending platforms, yield products, and stablecoins now exceeding $130 billion.
Built on programmable smart contracts, DeFi offers verifiability, auditability, and high composability. Today’s top protocols are among the most battle-tested systems in crypto. Yet, despite its massive success, the underlying DeFi infrastructure has seen little significant change over the past five years. Key mechanisms (like concentrated liquidity provision and lending models) have not evolved substantially.
Now, imagine a new wave of adaptive DeFi systems—protocols that automatically leverage or deleverage positions, rebalance liquidity provider (LP) positions, or enter/exit markets based on predicted price movements of underlying assets.
This marks the arrival of the Dynamic DeFi Era, powered fundamentally by artificial intelligence (AI) and machine learning (ML).
Machine Learning-Enhanced DeFi
@AlloraNetwork is a key player in this space, partnering with top DeFi protocols to inject machine learning-driven intelligence into traditional DeFi systems:
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ML-Driven Concentrated LP Strategies
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Adaptive Leverage/Deleverage LP Management
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Dynamic Yield Optimization Based on Forward-Looking Risk Signals
Predictions and signals are generated by the Allora Inference Network, where AI/ML engineers earn token incentives for contributing models. This incentive mechanism follows Darwinian AI design principles, rewarding higher-performing models.
AI-Managed DeFi Strategies
We’re also seeing @gizatechxyz and @almanak launch AI-managed and AI-created DeFi strategies:
Giza acts as an AI capital allocator, managing user funds across curated DeFi protocols and strategies.
Almanak allows AI agents to design and deploy tokenized DeFi vaults within minutes, customized to user-defined strategies. This makes Almanak both a capital allocator (bringing TVL to DeFi projects) and a vault creation platform for fund managers.
As traditional finance and DeFi converge further, ML systems will continue enhancing DeFi’s core value and risk management capabilities, while AI strategy curators design increasingly sophisticated strategies. We may see DeFi expand at an accelerated pace in 2026, unlocking a smarter, autonomous, and adaptive financial layer for the internet economy.
Outlook
By 2026, we may witness deeper convergence across narratives—crypto, AI, DeFi, real-world assets (RWA), decentralized physical infrastructure networks (DePIN), and robotics are merging into an interoperable digital economy operated jointly by humans and intelligent agents.
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DeFi becomes more dynamic
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AI helps DeFi reach millions of new users
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Crypto payment networks, stablecoins, and breakthrough use cases reach broader audiences
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New-gen neobanks connect Web2 and Web3 users, unifying both worlds
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Prediction markets grow in scale, with machine learning teams becoming a core pillar of prediction markets
Natural selection accelerates, with only a few crypto assets appreciating in price. Crypto projects may favor IPOs (Initial Public Offerings) over ICOs, tapping into traditional finance (TradFi) capital markets for liquidity, legitimacy, and scalability.
The next cycle = a cycle of deep integration between traditional finance (TradFi) and decentralized finance (DeFi).
Disclaimer
This article is for informational and entertainment purposes only. The views expressed do not constitute investment advice or recommendations. Readers should conduct their own due diligence based on their personal financial situation, investment goals, and risk tolerance (factors not considered herein) before investing. This article does not constitute an offer or solicitation to buy or sell any assets mentioned.
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