Where will the money for the next bull market come from?
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Where will the money for the next bull market come from?
The market must find larger-scale and more structurally stable sources of funding.
Navigating Web3 tides with focused insightsAuthor: Cathy
Bitcoin has fallen from $126,000 to its current $90,000—a 28.57% plunge.
Market panic, liquidity drying up, and deleveraging pressure are suffocating everyone. Coinglass data shows that the fourth quarter experienced significant forced liquidations, greatly weakening market liquidity.
Yet at the same time, structural tailwinds are converging: the U.S. SEC is poised to introduce its "Innovation Exemption" rule, expectations of the Fed entering a rate-cutting cycle are strengthening, and global institutional onboarding channels are maturing rapidly.
This is the market's greatest contradiction today: bleak in the short term, promising in the long term.
The question is: where will the money for the next bull run come from?
Retail funds aren't enough
Let’s debunk a myth currently unraveling: Digital Asset Treasury (DAT) companies.
What is DAT? Simply put, it refers to public companies raising capital through stock and debt issuance to buy crypto (Bitcoin or altcoins), then generating returns via active asset management (staking, lending, etc.).
The core of this model is the "capital flywheel": as long as the company's stock price remains above the net asset value (NAV) of its crypto holdings, it can continuously amplify capital by issuing high-priced shares to buy low-priced assets.
Sounds great—but there’s a prerequisite: the stock must maintain a persistent premium.
Once the market shifts toward "risk-off," especially during sharp Bitcoin declines, such high-beta premiums collapse quickly—sometimes even turning into discounts. Once the premium vanishes, share issuance dilutes shareholder value, and funding capacity dries up.
More critically, scale matters.
As of September 2025, although over 200 companies have adopted the DAT strategy, collectively holding more than $115 billion in digital assets, this represents less than 5% of the overall crypto market.
This means DAT buying power is simply insufficient to fuel the next bull run.
Worse, under market stress, DAT companies may need to sell assets to sustain operations, adding further downward pressure on an already weak market.
The market must find larger, structurally stable sources of capital.
Fed and SEC opening the floodgates
Structural liquidity shortages can only be resolved through institutional reform.
Fed: the faucet and the gate
December 1, 2025 marks the end of the Federal Reserve’s quantitative tightening (QT)—a key turning point.
Over the past two years, QT steadily drained liquidity from global markets; its conclusion removes a major structural constraint.
Even more important is the rate cut expectation.
On December 9, CME’s “Fed Watch” data showed an 87.3% probability of a 25-basis-point rate cut in December.
Historical data is clear: during the 2020 pandemic, the Fed’s rate cuts and quantitative easing drove Bitcoin from around $7,000 to nearly $29,000 by year-end. Rate cuts lower borrowing costs and push capital into riskier assets.
Another key figure to watch: Kevin Hassett, a potential Fed chair candidate.
He holds a favorable stance toward crypto and supports aggressive rate cuts. But more importantly, he brings dual strategic value:
One is the "faucet"—directly determining the looseness or tightness of monetary policy, affecting market liquidity costs.
The other is the "gate"—determining how open the U.S. banking system will be to the crypto industry.
If a crypto-friendly leader takes office, coordination between the FDIC and OCC on digital assets could accelerate—prerequisites for sovereign and pension fund entry.
SEC: regulation shifting from threat to opportunity
SEC Chair Paul Atkins has announced plans to launch the "Innovation Exemption" rule in January 2026.
This exemption aims to simplify compliance, allowing crypto firms to launch products faster within a regulatory sandbox. The new framework will update the token classification system, possibly including a "sunset clause"—terminating a token’s securities status once decentralization thresholds are met. This provides developers with clear legal boundaries, attracting talent and capital back to the U.S.
More importantly, it signals a shift in regulatory attitude.
In its 2026 review priorities, the SEC removed cryptocurrency from its standalone priority list, instead emphasizing data protection and privacy.
This indicates the SEC is moving from viewing digital assets as an "emerging threat" to integrating them into mainstream regulatory themes. This "de-risking" eliminates institutional compliance barriers, making digital assets more acceptable to corporate boards and asset managers.
The real source of big money
If DAT funds aren’t enough, where will the real capital come from? Perhaps the answer lies in three emerging pipelines.
Pipeline One: Institutional试探ive entry
ETFs have become the preferred vehicle for global asset managers allocating capital to crypto.
After the U.S. approved spot Bitcoin ETFs in January 2024, Hong Kong followed with spot Bitcoin and Ethereum ETFs. This global regulatory alignment makes ETFs a standardized channel for rapid international capital deployment.
But ETFs are just the beginning. More crucial is the maturation of custody and settlement infrastructure. Institutional focus has shifted from “whether they can invest” to “how to invest safely and efficiently.”
Global custodians like BNY Mellon now offer digital asset custody services. Platforms like Anchorage Digital integrate middleware (e.g., BridgePort) to provide institutional-grade settlement infrastructure. These collaborations allow institutions to allocate assets without pre-funding, significantly improving capital efficiency.
Most promising are pensions and sovereign wealth funds.
Billionaire investor Bill Miller predicts that within the next three to five years, financial advisors will begin recommending 1% to 3% Bitcoin allocations in portfolios. Though seemingly small, for trillions in global institutional assets, even 1%-3% translates to hundreds of billions in inflows.
Indiana has proposed allowing pension funds to invest in crypto ETFs. UAE sovereign investors partnered with 3iQ to launch a hedge fund attracting $100 million, targeting 12%-15% annual returns. Such institutionalized processes ensure capital inflows are predictable and structurally long-term—fundamentally different from the DAT model.
Pipeline Two: RWA, the trillion-dollar bridge
RWA (Real World Assets) tokenization may be the most significant driver of the next wave of liquidity.
What is RWA? It’s converting traditional assets (like bonds, real estate, art) into digital tokens on blockchain.
As of September 2025, the global RWA market cap stands at approximately $30.91 billion. According to Tren Finance, by 2030, tokenized RWA could grow over 50-fold, with most estimates placing the market size between $4 trillion and $30 trillion.
This dwarfs any existing crypto-native capital pool.
Why does RWA matter? It resolves the language barrier between traditional finance and DeFi. Tokenized bonds or treasuries allow both sides to “speak the same language.” RWA brings stable, yield-backed assets into DeFi, reducing volatility and offering non-crypto-native income streams for institutional investors.
Protocols like MakerDAO and Ondo Finance have attracted institutional capital by bringing U.S. Treasuries on-chain as collateral. RWA integration has made MakerDAO one of the largest DeFi protocols by TVL, with tens of billions in U.S. Treasuries backing DAI. This proves that when compliant, traditionally backed yield products emerge, traditional finance actively deploys capital.
Pipeline Three: Infrastructure upgrades
No matter the capital source—institutional allocation or RWA—efficient, low-cost transaction and settlement infrastructure is essential for mass adoption.
Layer 2 solutions process transactions off the Ethereum mainnet, significantly reducing gas fees and confirmation times. Platforms like dYdX use L2 to enable fast order creation and cancellation—impossible on Layer 1. This scalability is critical for handling high-frequency institutional capital flows.
Stablecoins are even more crucial.
According to TRM Labs, as of August 2025, stablecoin on-chain transaction volume exceeded $4 trillion—up 83% year-on-year—and accounted for 30% of all on-chain transactions. By mid-year, stablecoin market cap reached $166 billion, becoming a backbone of cross-border payments. A rise report shows over 43% of B2B cross-border payments in Southeast Asia use stablecoins.
As regulators (like Hong Kong’s HKMA) require stablecoin issuers to maintain 100% reserves, stablecoins solidify their role as compliant, highly liquid on-chain cash tools, enabling institutions to transfer and settle funds efficiently.
How might the money arrive?
If these three pipelines truly open, how will capital flow in? Short-term corrections reflect necessary deleveraging, but structural indicators suggest crypto may stand at the threshold of a new wave of large-scale capital inflows.
Short-term (late 2025 – Q1 2026): Policy-driven rebound
If the Fed ends QT and cuts rates, and if the SEC’s "Innovation Exemption" launches in January, the market may see a policy-driven rebound. This phase will be driven largely by sentiment—clear regulatory signals pulling risk capital back. However, this capital will be speculative, volatile, and its sustainability uncertain.
Mid-term (2026–2027): Gradual institutional entry
As global ETFs and custody infrastructure mature, liquidity may increasingly come from regulated institutional pools. Small strategic allocations from pensions and sovereign funds could take effect. This capital is patient and low-leverage, providing market stability—unlike retail, it won’t chase rallies or panic sell.
Long-term (2027–2030): Structural transformation via RWA
Sustained, large-scale liquidity may hinge on RWA tokenization. By bringing traditional assets’ value, stability, and yield streams onto blockchain, RWA could push DeFi TVL into the trillions. Linking the crypto ecosystem directly to global balance sheets may ensure long-term structural growth—not cyclical speculation. If this path unfolds, crypto will move from the fringe to the mainstream.
Summary
The last bull run was fueled by retail and leverage.
The next one, if it comes, will likely be powered by institutions and infrastructure.
The market is moving from the periphery to the mainstream. The question is no longer “can we invest?” but “how do we invest safely?”
Money won’t arrive overnight, but the pipelines are being built.
Over the next three to five years, these conduits may gradually open. When they do, the market battle will no longer be for retail attention—but for institutional trust and allocation share.
This is a shift from speculation to infrastructure, and an inevitable step toward crypto market maturity.
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