Author: Wintermute

Compile: DeepTide TechFlow

The Tides of Depth:

The four-year halving cycle, once considered an "iron law" of the cryptocurrency market, is now facing unprecedented challenges. In its latest 2025 annual report, top market maker Wintermute pointed out that the traditional cyclical narrative has already become invalid, and market logic has shifted from "seasonal rotation" to "liquidity lock-up."

2025 did not bring the widespread euphoria that was expected; instead, it revealed extreme emotional polarization: on one hand, BTC and ETH entered the institutional arena with the support of ETFs, while on the other hand, altcoins experienced a sharp decline in explosive growth and a shortened lifecycle.

Faced with 2026, can the cryptocurrency market break through the current stalemate? Wintermute has identified three key factors that could disrupt the status quo.

The main text is as follows:

2025 did not bring the widespread bullish market that was expected, but this might be viewed by future generations as the beginning of the transition of cryptocurrencies from speculative tools to a mature asset class.

The traditional four-year cycle is becoming obsolete. Market performance is no longer dominated by self-fulfilling timed narratives, but rather depends on the direction of liquidity flows and the concentration of investor attention.

What has changed in 2025?

Historically, crypto-native wealth has manifested as an interchangeable pool of capital. Bitcoin's (BTC) gains spill over into Ethereum (ETH), then flow into blue-chip assets, and finally reach altcoins.

Wintermute's over-the-counter (OTC) flow data indicates that this transmission mechanism significantly weakened in 2025.

Spot exchange-traded funds (ETFs) and digital asset trusts (DATs) have evolved into a "walled garden." They provide ongoing demand for large-cap assets but do not naturally facilitate the rotation of capital into the broader market.

2025 became an extremely polarizing year as retail investors' interest was drawn to the stock market.

The average duration of altcoin rallies in 2025 is 20 days, significantly lower than the 60 days in 2024.

A small number of mainstream assets have absorbed the vast majority of new capital inflows, while the broader market struggles.

For market participation to go beyond major assets and expand further, at least one of the following three events must occur:

1. Expanding Institutional Mandates

Currently, most of the newly added liquidity remains confined to institutional channels. A comprehensive recovery of the market requires institutional investors to broaden the range of assets they are willing to invest in.

Early signs are already emerging through the ETF applications for Solana (SOL) and XRP.

2. Wealth Effect from Mainstream Assets

A strong rebound in Bitcoin or Ethereum could create a wealth effect that spills over into broader markets, similar to what was seen in 2024.

There remains uncertainty regarding how much capital will ultimately flow back into digital assets.

3. Shift of Attention Back to the Stock Market (Rotation from Equities)

Retail investors' attention may shift back from sectors in the stock market (such as artificial intelligence (AI), rare earth elements, quantum computing, etc.) to cryptocurrencies, bringing fresh inflows of capital and the minting of stablecoins.

Although this is the scenario with the lowest probability, it would significantly expand market participation.

The future outcome will depend on whether the aforementioned catalysts can effectively spread liquidity beyond a few large-cap assets, or whether this trend of concentration will continue.

Understanding the flow of capital and identifying the necessary structural changes will determine which strategies will be effective by 2026.