jakiro
Author:Cathy
Bitcoin fell from US$126,000 to US$90,000 today, a 28.57% plunge.
The market is panicking, liquidity is drying up, and the pressure of deleveraging has left everyone breathless.Coinglass data shows that the fourth quarter experienced significant forced liquidation events, and market liquidity was greatly weakened.
But at the same time, some structural benefits are converging:The U.S. SEC is about to launch “innovation exemption” rules, the Federal Reserve is increasingly expected to enter an interest rate cut cycle, and the global institutional channel is maturing rapidly.
This is the biggest contradiction in the current market:The short term looks miserable, the long term looks great.
The problem is,Where will the money for the next bull market come from?
Retail investors don’t have enough money
Let me first talk about a myth that is being shattered:Digital Asset Treasury Company (DAT).
What is DAT?To put it simply, listed companies buy coins (Bitcoin or other altcoins) by issuing stocks and debt, and then make money through active asset management (pledge, lending, etc.).
The core of this model lies in the “capital flywheel”:As long as the company’s stock price can continue to be higher than the net value (NAV) of the crypto assets it holds, it can continue to expand capital by issuing stocks at high prices and buying coins at low prices.
It sounds wonderful, but there is a prerequisite:The stock price must always maintain a premium.
Once the market turns to “risk aversion,” especially when Bitcoin plummets, this high beta premium will quickly collapse or even turn into a discount.Once the premium disappears, issuing shares will dilute shareholder value and the financing capacity will dry up.
What’s more critical is scale.
As of September 2025, although more than 200 companies have adopted DAT strategies and collectively hold more than $115 billion in digital assets, this number accounts for less than 5% of the overall encryption market.
This means that the purchasing power of DAT is simply not enough to support the next bull market.
What’s worse,When the market is under pressure, DAT companies may need to sell assets to maintain operations, which will bring additional selling pressure to the weak market.
The market must find a larger source of funds with a more stable structure.
Federal Reserve and SEC open floodgates
Structural liquidity shortages can only be solved through institutional reforms.
Federal Reserve: Taps and Gates
On December 1, 2025, the Federal Reserve’s quantitative tightening policy will end, which is a key turning point.
QT quantitative tightening has continued to drain liquidity from global markets over the past two years, and its end means that a major structural constraint has been removed.
More important are interest rate cut expectations.
On December 9, according to CME’s “Fed Watch” data, the probability of the Federal Reserve cutting interest rates by 25 points in December was 87.3%.
Historical data is very intuitive:During the 2020 epidemic, the Federal Reserve’s interest rate cuts and quantitative easing allowed Bitcoin to rise from approximately US$7,000 to approximately US$29,000 at the end of the year..Cutting interest rates will lower borrowing costs and drive capital flows into riskier assets.
There is another key person worth paying attention to:Kevin Hassett, potential candidate for Fed chairman.
He has a friendly stance on crypto assets and supports aggressive interest rate cuts.But more importantly, his dual strategic value:
One is the “faucet”——Directly determines the degree of tightness of monetary policy and affects market liquidity costs.
The other is the “gate”— determines the extent to which the U.S. banking system is open to the crypto industry.
If a crypto-friendly leader takes office, it may accelerate the collaboration between the FDIC and the OCC on digital assets, which is a prerequisite for the entry of sovereign funds and pension funds.
SEC: Regulation turns from threat to opportunity
SEC Chairman Paul Atkins has announced plans to launch in January 2026“innovation exemption” (Innovation Exemption) rule.
This exemption aims to simplify the compliance process and allow crypto companies to launch products faster in the regulatory sandbox.The new framework will update the token classification system and may include ““Sunset clause” – when the degree of decentralization of a currency reaches the standard, its security status terminates.This is openIt provides clear legal boundaries for developers to attract talent and capital back to the United States.
More important is the change in regulatory attitudes.
Among the SEC’s review priorities in 2026,For the first time, cryptocurrencies have been removed from its independent priority list, emphasizing data protection and privacy instead.
This shows that the SEC is moving from viewing digital assets as an “emerging threat” to integrating them into mainstream regulatory topics.This “de-risking” removes institutional compliance barriers and makes digital assets more acceptable to corporate boards and asset managers.
Really Possible Big Money
If DAT money is not enough, then where is the real big money?Perhaps the answer lies in the three pipelines being laid.
Channel 1: Tentative entry of institutions
ETFs have become the preferred way for global asset managers to allocate funds to the crypto space.
After the United States approved spot Bitcoin ETFs in January 2024, Hong Kong also approved spot Bitcoin and Ethereum ETFs.This global regulatory convergence has made ETFs a standardized channel for rapid deployment of international capital.
But ETFs are just the beginning;More important is the maturation of custody and settlement infrastructure.The focus of institutional investors has shifted from “whether they can invest” to “how to invest safely and efficiently.”
Global custodians such as Bank of New York Mellon already provide digital asset custody services.Platforms such as Anchorage Digital integrate middleware (such as BridgePort) to provide institutional-grade settlement infrastructure.These collaborations allow institutions to allocate assets without pre-funding, greatly improving the efficiency of capital use.
The most imaginative are pensions and sovereign wealth funds.
Billionaire investor Bill Miller said he expects that within the next three to five years, financial advisors will start recommending allocating 1% to 3% of Bitcoin in investment portfolios.It sounds like a small proportion, but for the trillions of dollars of institutional assets around the world, an allocation of 1%-3% means an inflow of trillions of dollars.
Indiana has proposed allowing pension funds to invest in crypto ETFs.UAE sovereign investor partners with 3iQ to launch hedge fund, attracts $100 million,The target annualized return is 12%-15%.This institutionalized process ensures that institutional capital inflows are predictable and long-term structured, distinct from the DAT model.
Pipeline Two: RWA, the Trillion-Dollar Bridge
Tokenization of RWA (Real World Assets) may be the most important driver of the next wave of liquidity.
What is RWA?It is to convert traditional assets (such as bonds, real estate, art) into digital tokens on the blockchain.
As of September 2025, the total global RWA market value is approximately US$30.91 billion.According to a Tren Finance report, the tokenized RWA market may grow more than 50 times by 2030, with most companies predicting that its market size may reach a scale of US$4-30 trillion.
This scale far exceeds any existing crypto-native capital pool.
Why is RWA important?Because it solves the language barrier between traditional finance and DeFi.Tokenizing bonds or treasury bills allows both parties to “speak the same language.”RWA brings stable, income-backed assets to DeFi, reduces volatility, and provides institutional investors with a non-crypto-native source of income.
Protocols such as MakerDAO and Ondo Finance have become magnets for institutional capital by bringing U.S. Treasury bills on-chain as collateral.RWA integration has made MakerDAO one of TVL’s largest DeFi protocols, with billions of dollars in U.S. Treasuries backing DAI.This shows that traditional finance will actively deploy capital when compliant and traditional asset-backed income products emerge.
Pipeline Three: Infrastructure Upgrade
Regardless of whether the source of capital is institutional allocation or RWA, efficient, low-cost trade settlement infrastructure is a prerequisite for mass adoption.
Layer 2 processes transactions outside of the Ethereum mainnet, significantly reducing gas fees and shortening confirmation times.Platforms such as dYdX provide fast order creation and cancellation capabilities through L2, which is not possible on Layer 1.This scalability is critical to handling high-frequency institutional capital flows.
Stablecoins are even more critical.
According to a TRM Labs report, as of August 2025, the transaction volume on the stablecoin chain exceeded US$4 trillion, a year-on-year increase of 83%, accounting for 30% of the total transaction volume on all chains.As of the first half of the year, the total market value of stablecoins reached US$166 billion and has become the mainstay of cross-border payments.The rise report shows that more than 43% of B2B cross-border payments in Southeast Asia use stable coins.
As regulators, such as the Hong Kong Monetary Authority, require stablecoin issuersKeep 100% Reserved, the status of stablecoins as compliant, highly liquid on-chain cash instruments has been consolidated, ensuring that institutions can efficiently transfer and clear funds.
Where could the money possibly come from?
If these three pipelines can really be opened, where will the money come from?The market’s short-term pullback reflects the necessary process of deleveraging, but structural indicators suggest that the crypto market may be on the threshold of a new round of large-scale capital inflows.
Short term (late 2025-Q1 2026): possible rebound caused by policies
If the Fed ends QT and cuts interest rates, and if the SEC’s “innovation exemption” is implemented in January, the market may usher in a policy-driven rebound.This stage mainly relies on psychological factors and clear regulatory signals to allow risk capital to flow back.However, this wave of funds is highly speculative and volatile, and its sustainability is questionable.
Medium term (2026-2027): Progressive admission of institutional funds
As global ETF and custody infrastructure matures, liquidity will likely come primarily from regulated institutional pools.A small amount of strategic allocation by pension funds and sovereign funds may be effective. This kind of capital has the characteristics of high patience and low leverage, which can provide a stable foundation for the market and will not chase the rise and fall like retail investors.
Long term (2027-2030): Structural changes likely to result from RWA
Sustained large-scale liquidity may rely on RWA tokenization.RWA brings the value, stability and revenue streams of traditional assets to the blockchain,It is expected to push DeFi’s TVL to the trillion level.RWA directly links the crypto ecosystem to the global balance sheet, potentially ensuring long-term structural growth rather than cyclical speculation.If this path holds true, the crypto market will truly move from the fringe to the mainstream.
Summary
The last bull market relied on retail investors and leverage.If the next round comes, it may depend on systems and infrastructure.
The market is moving from the fringe to the mainstream, and the question has changed from “can I invest” to “how to invest safely”.
The money won’t come suddenly, but the pipeline is already being laid.
These pipelines may gradually open up over the next three to five years.By then, what the market is competing for is no longer the attention of retail investors, but the trust and allocation quotas of institutions.
This is a transition from speculation to infrastructure, and it is also the only way for the encryption market to mature.
