Asset manager 21shares has scaled back several of its bullish forecasts for the crypto industry this year, saying institutional adoption continues to strengthen even as weak market conditions and muted retail participation have slowed the pace of growth.
In its midyear outlook, the asset manager said the industry’s underlying infrastructure has advanced more quickly than prices. Areas such as exchange-traded funds (ETFs), stablecoin regulation, tokenization and prediction markets have continued to mature, but weaker crypto prices, major DeFi exploits and slower-than-expected enterprise adoption have pushed several of its 2026 targets out of reach.
One of the report’s clearest conclusions was that Bitcoin’s (BTC) four-year market cycle remains intact, despite signs the asset class is becoming more institutionally driven.
“After peaking at around $126,000 in October 2025, Bitcoin pulled back sharply and has continued to trade in line with prior post-halving patterns,” the analysts wrote, arguing that institutional ownership has softened market drawdowns but has not fundamentally altered Bitcoin’s cyclical behavior.
Bitcoin’s predictable four-year cycle continues to be a major driver of market conditions. Source: 21shares
Former 21shares co-founder Ophelia Snyder, who departed the company following its acquisition by FalconX in 2025, recently made a similar observation about how institutional investors have reshaped crypto markets.
“The investor base is larger, more institutional, and more connected to the broader financial system,” Snyder wrote in a recent Substack post. “As a result, competing narratives, geopolitical developments, and macroeconomic shifts all have a much larger impact on crypto pricing than they once did.”
Prediction markets expected to outperform
Among the sectors outperforming expectations, 21shares singled out prediction markets as one of crypto’s strongest growth areas, projecting annual trading volume will surpass $100 billion this year.
The report also highlighted consolidation as a defining trend across the industry. Public companies holding crypto on their balance sheets are beginning to diverge, with many smaller treasury players trading below the value of their digital asset holdings, pointing to further consolidation in the sector.
A similar pattern is emerging across Ethereum’s layer-2 ecosystem, where a handful of dominant rollups continue to gain market share while dozens of smaller networks struggle to attract meaningful users and liquidity.
Related: Bitcoin miners need billions to fund AI ambitions, led by IREN’s $21B gap
Crypto ETFs show resilience despite outflows
That resilience is also evident in crypto exchange-traded products, which have continued attracting long-term institutional investors despite weaker market conditions.
While US spot Bitcoin ETFs have recorded roughly $3 billion in net outflows this year, 21shares said those figures don’t tell the full story. Holdings remain just above 1.25 million BTC, near an all-time high in for the token, suggesting many investors have held onto their positions through the downturn.
“Investors are holding through volatility or quietly building strategic positions, even with Bitcoin trading well below its highs,” the analysts wrote.
Crypto ETP assets have fallen from their peak, but cumulative investor inflows have remained resilient. Source: 21shares
The analysts also pointed to improving regulatory clarity in the United States, citing the Securities and Exchange Commission’s generic listing standards that have helped convert a backlog of crypto ETF applications into a steady stream of new product launches beyond Bitcoin and Ether.
“Hyperliquid stands out,” the analysts wrote. “US spot ETFs tracking the asset attracted over $150 million in net inflows in under a month, evidence that traditional capital continues to flow toward digital assets.”
Related: CBOE weighs converting BTC, ETH continuous futures into perpetual futures: Report
