On October 6, crypto markets hit a record high market cap of $4.3 trillion.

Today… ?

The crypto market is worth $2.3 trillion, losing $2 TRILLION in four months.

That’s a 46% drop.

Worse, the lack of any bounce in between has become a psychological breaking point.

In past downturns, even the ugliest stretches came with moments of reprieve. This time, the fall continues uninterrupted—no pause, no catch, no breath.

Investors are understandably left scrambling for explanations—liquidity stress, institutional exits, exchange fragility, forced selling.

Meanwhile, macro shocks—hawkish Fed fears and geopolitics—have only turbocharged the decline.

Amidst all this…

Here’s the 10,000-foot view of what’s happening:

1. The entire crypto market is still correlated to Bitcoin.

2. Bitcoin is supposed to react to liquidity the way a Geiger counter reacts to radiation, but the source of that “radiation” has become more diffuse.

3. Crypto as a monolith is losing relevance. Crypto as infrastructure is slowly gaining it.

Looking forward, this means that the forces that lifted crypto before won’t be the ones that carry it forward.

What comes next will decide what parts of the industry pass through this transition—and what parts get left behind.

Today, let’s go over what’s happening, three things I’m banking on in 2026, and how I’m playing it.

Let’s dive in.

Crypto’s Purpose

In the last cycle, crypto behaved like a release valve for liquidity.

Zero rates.

QE everywhere.

No yield.

No constraint.

Capital sloshed, and crypto—small, reflexive, permissionless—absorbed the overflow.

Since then, crypto’s purpose has been framed as a stimulus trade, a tech proxy, and a QE sponge.

But liquidity no longer disperses evenly.

We’re seeing an inversion of the post-QE era, where money led and outcomes followed. Now, monetary policy power is weakening while fiscal policy is strengthening.

Outcomes are defined first—by fiscal priorities, industrial mandates, and geopolitical constraints—and liquidity is routed to serve them.

Meaning, the world is now more intentional, more unpredictable… and more extreme. 

This environment rewards assets that can absorb directed capital, not just excess liquidity.

And right now, liquidity is being channeled.

• China → gold, commodities, domestic equities
• US → bills, defense, infrastructure, selective tech
• Banks → balance-sheet repair, not risk expansion

Crypto is not integrated into those channels… yet.

But Trump’s aim to accelerate crypto as a tool of statecraft and competitiveness fits squarely into the current zeitgeist.

Yet, until the market’s correlation to Bitcoin breaks structurally, not narratively, the old dynamic will still persist.

So the current drawdown is doing three things…

1. Flushing narrative capital.
2. Forcing differentiation.
3. Separating infrastructure from theater.

Crypto as a monolith is losing relevance. Crypto as infrastructure is gaining it—slowly, unevenly, and quietly.

What This Means for Investors

If you believe the future brings more fragmentation, more targeted fiscal policy, and more constrained capital, then crypto’s relevance will be earned through function, not reflex.

Three things I’m still banking on in 2026…

1. Tokenization increasingly turns blockchains into settlement infrastructure for real assets.

2. Stablecoins and tokenized treasuries increasingly become the working capital rails for payments and treasury operations, AND…

3. AI drives demand for machine-to-machine coordination, usage-based settlement, and verifiable execution.

If crypto is no longer the emergency overflow tank, then the paradigm shifts…

• Accumulation replaces momentum worship
• Network usage, revenue, and settlement relevance matter more than narrative velocity
• Time horizons lengthen—even as patience thins elsewhere

That last point is perhaps the most important.

As time horizons compress everywhere else—faster macro cycles, quicker rotations, thinner emotional bandwidth—crypto will stretch in the opposite direction.

So the paradox: crypto feels dreary in the immediate run, but increasingly more important in the long run. Few people have the patience to stay right now, which increases the payoff for those who do.

That tension is where asymmetric outcomes have always been born.

Meanwhile, my approach—my rules of the road—haven’t changed: dollar-cost average, real utility only (skip the memes), zero leverage.