ALTERNATIVE MARKETS UPDATE – OUTLOOK 2026

​US inflation has oscillated between roughly 3.5% and 2% since the beginning of 2025, reflecting a push-and-pull between easing goods inflation, slower shelter disinflation, and still-resilient services driven by wage growth and consumption, while energy and food prices added intermittent volatility rather than a sustained trend. Looking ahead, we expect headline inflation to average around 2.5% through 2025, with downside risks toward 1.5% if goods deflation accelerates and shelter inflation cools faster than expected, and upside risks toward 4% should wage pressures, energy prices, or renewed supply-side disruptions re-emerge. The labour market has begun to soften, with unemployment gradually rising but still remaining low by historical standards, signalling cooling rather than distress; we anticipate a further modest uptick before a stabilisation and subsequent decline into the 2026 midterm election cycle as policy easing and fiscal dynamics support activity. On monetary policy, the Federal Reserve delivered rate cuts across 2024 and 2025, bringing the policy rate to around 3.75%, though the easing cycle was notably delayed as policymakers prioritised confidence that inflation pressures were durably contained. Despite a more hawkish tone in recent communications, we expect up to three additional cuts in 2026 as growth moderates and inflation converges toward target, a year that will also be institutionally significant given that the leadership decision regarding Jerome Powell’s succession is scheduled for 2026, potentially shaping the medium-term policy outlook. Figure 1 summarizes the recent developments and expectations for 2026.

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RESEARCH PERSPECTIVE VOL. 266 December 2025 Alternative Markets Outlook US inflation has oscillated between roughly 3.5% and 2% since the beginning of 2025, reflecting a push-and-pull between easing goods inflation, slower shelter disinflation, and still-resilient services driven by wage growth and consumption, while energy and food prices added intermittent volatility rather than a sustained trend. Looking ahead, we expect headline inflation to average around 2.5% through 2025, with downside risks toward 1.5% if goods deflation accelerates and shelter inflation cools faster than expected, and upside risks toward 4% should wage pressures, energy prices, or renewed supply-side disruptions re-emerge. The labour market has begun to soften, with unemployment gradually rising but still remaining low by historical standards, signalling cooling rather than distress; we anticipate a further modest uptick before a stabilisation and subsequent decline into the 2026 midterm election cycle as policy easing and fiscal dynamics support activity. On monetary policy, the Federal Reserve delivered rate cuts across 2024 and 2025, bringing the policy rate to around 3.75%, though the easing cycle was notably delayed as policymakers prioritised confidence that inflation pressures were durably contained. Despite a more hawkish tone in recent communications, we expect up to three additional cuts in 2026 as growth moderates and inflation converges toward target, a year that will also be institutionally significant given that the leadership decision regarding Jerome Powell’s succession is scheduled for 2026, potentially shaping the medium-term policy outlook. Figure 1 summarizes the recent developments and expectations for 2026. Figure 1: US Inflation and Interest Rate from January 2024 to December 2025 and Expectations for 2026, Source: Trading Economics, U.S. Bureau of Labor Statistics & Federal Reserve, December 2025 In the Euro area, inflation has hovered between around 3% and just below 2% since the beginning of 2024, underscoring a structurally lower inflation backdrop than in the United States, driven by weaker aggregate demand, slower wage transmission, and a faster pass-through of earlier energy price declines. Looking ahead, it is anticipated that euro area inflation will average close to 1.8% throughout 2026. This is broadly consistent with price stability, although outcomes remain conditional on the growth environment: A softer macroeconomic trajectory could push inflation toward 1%, while a more resilient economy, renewed energy pressures, or stronger wage dynamics could see it rise toward 3.3%. Labour markets across the Euro area have remained comparatively resilient, with unemployment rates near historical lows. Nonetheless, recent data point to gradual softening as growth momentum slowed, particularly in manufacturing-intensive economies. On monetary policy, the European Central Bank cut interest rates relatively aggressively between summer 2024 and summer 2025 in response to easing inflation and subdued growth, after which policy rates have been held steady. This pause is widely expected to extend through 2026, reflecting a balance between anchored inflation expectations and a still-fragile economic recovery. Figure 2 provides more details. Figure 2: Euro Area Inflation and Interest Rate from January 2024 to December 2025 and Expectations for 2026, Source: Trading Economics, European Central Bank & Eurostat, December 2025 In the UK, inflation has fluctuated between roughly 2% and 4% since 2024, but more recently price pressures have re-accelerated and are now closer to the upper end of that range, reflecting the challenging macroeconomic backdrop marked by weak productivity growth, persistent services inflation, elevated wage settlements, and ongoing frictions linked to trade, labour supply, and fiscal consolidation. Looking ahead to 2026, inflation is expected to trend back toward the 2% target as demand cools and tighter financial conditions continue to weigh on pricing power. However, a more plausible baseline is that inflation stabilises in a 2%–3% range, with a downside constrained by structurally higher services costs and an upside scenario in which inflation could average close to 4% should wage pressures or energy prices remain elevated. On monetary policy, the Bank of England has eased policy meaningfully, cutting its key rate from 5.25% in early 2024 to around 3.75% by the end of 2025 as inflation risks initially receded and growth weakened. For 2026, markets anticipate up to three additional rate cuts, which would lower the policy rate toward 3%, signalling a cautious but continued shift toward supporting economic activity while maintaining vigilance against renewed inflationary pressures. Figure 3 highlights the aforementioned developments. Figure 3: UK Inflation and Interest Rate from January 2024 to December 2025 and Expectations for 2026, Source: Trading Economics, Bank of England & Office for National Statistics, December 2025 Yields across fixed income markets declined through 2025 as central banks gradually lowered key policy rates, reinforcing expectations that the peak of the tightening cycle had passed and pulling down government bond yields across major maturities. At the same time, credit markets benefited from strong demand and improving risk sentiment, leading to a substantial compression in spreads between investment-grade corporate bonds and government bonds. Similar spread tightening was also observed between investment-grade and high-yield segments. Looking ahead to 2026, with government bond yields expected to drift modestly lower as monetary policy remains accommodative, overall yields are anticipated to edge down slightly. However, for credit markets the picture is more nuanced: investment-grade and high-yield spreads are expected to widen as default rates trend higher from cyclical lows, reflecting slower growth and tighter financial conditions for weaker borrowers. In aggregate, this dynamic is likely to result in marginally lower yields for investment-grade bonds, while high-yield yields may remain broadly flat or even rise modestly, depending on how economic conditions and default dynamics evolve over the course of 2026. Building on the decline in fixed income yields and the evolving spread dynamics discussed above, global equity markets were shaped by a changing macro-financial environment in which lower discount rates and shifting risk premia played an important role. Against this backdrop, several key developments moved markets. First, the transition from restrictive to easing monetary policy expectations supported risk assets, as investors increasingly priced a lower terminal rate path and a softer landing for major economies. Second, corporate earnings dynamics were central, with markets rewarding companies able to defend margins amid slowing growth while penalising those exposed to cost pressures and weaker end demand. Third, the continued dominance of technology and AI-related themes influenced market leadership, reinforcing concentration risks while also providing broad index support. Fourth, geopolitical and trade-related uncertainties intermittently weighed on sentiment, contributing to episodes of volatility rather than sustained drawdowns. Finally, shifts in government bond yields and credit conditions periodically triggered style and sector rotations as equity valuation frameworks adjusted to the evolving rate environment. US equities delivered exceptionally strong returns over the past two years, with the S&P 500 advancing 23.3% in 2024 and a further 18.1% in 2025 year to date. The 2024 outcome materially exceeded even the most optimistic strategist expectations, driven by resilient growth, rapid disinflation, and powerful earnings momentum, while the 2025 performance, though still robust, has only modestly surpassed the average forecasts set at the start of the year. Looking ahead to 2026, return expectations are notably more subdued compared with recent years: Consensus outlooks point to an average gain of around 8%, with a downside scenario of approximately -8% and an upside case near 17%, reflecting a more balanced distribution of risks. These projections are underpinned by several recurring themes: Earnings growth remains the primary anchor, with assumptions of solid revenue expansion and double-digit EPS growth supported by operating leverage and easing cost pressures. Secondly, AI-driven productivity narrative continues to justify elevated valuations, as heavy investment is expected to translate into durable margin and efficiency gains across multiple sectors. Thirdly, monetary policy is assumed to be more supportive, with stabilising or declining rates lowering discount rates and sustaining equity multiples. Fourthly, macroeconomic risks are viewed as contained rather than acute, with slower but positive growth and no deep recession. Finally, positioning and flows are expected to remain constructive, supported by buybacks, pension demand, and limited compelling alternatives as real yields normalise, providing an ongoing bid for large-cap US equities despite higher valuation levels. Figure 4 summarizes these findings. Figure 4: S&P 500 Level from January 2024 to December 2025 and Expectations for 2026, Sources: Investing, Standard and Poor’s & Various Forecasts, December 2025 Turning to European equities, expectations are more heterogeneous and far more country-specific than in the US, reflecting differing sector mixes and macro sensitivities. Germany stands out, with the DAX rising a strong 21.5% in 2025, largely driven by global industrial demand and improving sentiment around cyclicals. Looking into 2026, consensus expectations centre on 15% upside, with a downside scenario near 5% and bullish outcomes approaching 25%. Crucially, the drivers differ materially from the S&P 500. DAX forecasts are not predicated on further valuation expansion, but instead on an earnings recovery and rate relief. Most institutions point to several recurring factors: ECB stabilisation and easing already largely priced, limiting policy risk; export-led earnings leverage, given Germany’s high exposure to global trade; a significant valuation discount versus US equities, offering room for rerating if earnings deliver; and high sensitivity to global industrial capex and China, which amplifies both upside in a recovery scenario and downside in the event of renewed external weakness. Figure 5 summarizes the return expectations of key economies for 2026. The UK offers a more defensive equity profile, with the FTSE 100 rising 19.5% in 2025, driven primarily by strong cash flows and global sector exposure rather than domestic growth. For 2026, forecasts are notably narrower, with a downside scenario around 6%, an average expectation of roughly 8%, and an upside case near 12%, reflecting the index’s income-led characteristics. Projections are underpinned by the FTSE’s heavy weighting toward energy, financials, healthcare, and consumer staples, where earnings visibility and dividend yields provide stability, while gradual Bank of England easing offers modest valuation support. Overall, expectations centre on steady total returns and low volatility, positioning UK equities as a late-cycle, defensive allocation with capped upside. France delivered a more muted return in 2025, with the CAC 40 rising 10.0%, reflecting a year of consolidation after prior outperformance in global luxury and industrial champions. Looking to 2026, forecasts are more constructive, with a downside scenario around 8%, an average expectation near 12%, and a bullish case reaching 20%. These projections are largely driven by the CAC 40’s heavy exposure to globally oriented luxury, aerospace, energy, and industrial leaders, where earnings are leveraged to international demand rather than domestic French growth. Expectations also assume continued margin normalisation and stable financing conditions, allowing earnings growth to translate into equity returns, while political and fiscal uncertainties are seen as constraints on valuation expansion rather than outright downside risks. Switzerland posted a solid but lower-beta performance in 2025, with the SMI advancing around 14%, consistent with its defensive market profile. For 2026, forecasts are deliberately conservative, with a downside scenario near 4%, an average expectation of roughly 7%, and an upside case around 10%. Return assumptions are driven by stable earnings growth and strong pricing power in healthcare, consumer staples, and pharmaceuticals, alongside high and reliable dividend contributions, rather than cyclical acceleration. With interest rates already low and the Swiss franc typically firm, valuation expansion is assumed to be limited, leaving total returns to be generated primarily through earnings resilience, income, and low volatility, reinforcing Switzerland’s role as a defensive, capital-preservation market in 2026. Figure 5: Returns Expectations for Global Equities (US: S&P 500, Germany: DAX, UK: FTSE 100, France: CAC 40, Switzerland: SMI, Japan: Nikkei 225, China: Shanghai Composite) in 2026, Sources: Various Forecasts, December 2025 Japan was one of the standout equity markets in 2025, with the Nikkei gaining 28.5%, supported by strong earnings momentum, yen weakness, and accelerating corporate governance reforms. Looking ahead to 2026, forecasts moderate but remain constructive, with a downside scenario around 8%, an average expectation near 12%, and an upside case approaching 20%. These projections are underpinned by continued improvements in capital efficiency, shareholder returns, and margin discipline, alongside still-supportive financial conditions even as the Bank of Japan normalises policy gradually. Returns are therefore expected to be driven less by multiple expansion and more by earnings growth, buybacks, and structural reform momentum, keeping Japan positioned as a structural growth story rather than a purely cyclical trade in 2026. China recorded a strong rebound in 2025, with the Shanghai Composite advancing 21.5%, largely reflecting policy stabilisation measures and a recovery from deeply depressed valuation levels. For 2026, forecasts remain constructive but policy-dependent, with a downside scenario around 10%, an average expectation near 12%, and an upside case reaching 20%. These projections are driven primarily by assumptions of continued fiscal and monetary support, gradual stabilisation in the property sector, and earnings normalisation in manufacturing and infrastructure-linked sectors, rather than a broad-based consumption boom. However, most strategists also assume that structural challenges and geopolitical risks will cap valuation expansion, leaving returns contingent on policy execution and incremental improvements in confidence rather than a sustained rerating of Chinese equities. Gold delivered an exceptional performance in 2025, returning roughly 65% and clearly emerging as the best-performing major asset class, while forecasts made a year earlier proved far too conservative in anticipating the scale and persistence of the rally. The strong performance was underpinned by a confluence of factors. Declining real yields as monetary policy pivoted toward easing, and sustained central bank buying amid geopolitical fragmentation were key reasons for the surge. Additionally, renewed investor demand for portfolio hedges against fiscal deterioration and policy uncertainty, and a weaker US dollar environment amplified price momentum. This strength was not confined to gold alone, as other precious metals, most notably silver, also pushed to new all-time highs, reflecting broader demand for hard assets and tightening supply dynamics across parts of the metals complex. Against this backdrop, forecasts for 2026 envisage a wide but elevated range for gold prices, with a downside scenario around 3,850, an average expectation near 4,650, and an upside case approaching 5,000. These projections reflect continued structural support from central-bank diversification and geopolitical risk premia, balanced against cyclical uncertainties around growth, the pace of rate cuts, and investor positioning, suggesting that while the pace of gains may moderate after an extraordinary 2025, gold is expected to remain anchored at historically high levels. Figure 6 summarizes these findings. Figure 6: Gold Price in 2025 and Expectations for 2026, Sources: Investing & Various Forecasts, December 2025 Hedge Funds Hedge funds delivered a notably strong year in 2025, benefiting from an environment of elevated volatility, policy divergence, and rising asset-price dispersion. According to HFR, global hedge fund assets climbed to nearly $5tn by Q3 2025, marking the eighth consecutive quarter of growth and the most sustained capital accumulation since before the global financial crisis. Performance was broadly solid across core strategies, while net inflows reflected a clear shift in allocator behaviour, as institutions sought alternatives to the increasingly unreliable equity–bond diversification framework. Against a backdrop of uneven global growth, volatile bond markets, and persistent geopolitical risk, hedge funds were increasingly used as active risk-management and diversification tools, reinforcing their role within institutional portfolios during 2025. Performance across hedge fund strategies in 2025 further illustrates this resilience and dispersion. Our Equity Hedge Fund strategies extended their steady gains, rising from 14.20% in 2024 to 27.43% in 2025, supported by stock-level dispersion and active positioning. Fixed Income strategies saw a more pronounced improvement, accelerating from 6.04% to 7.52%, benefiting from rate volatility and relative-value opportunities across curves and credit. In contrast, Tactical Trading strategies slowed meaningfully, easing from 4.74% in 2024 to -2.48% in 2025, reflecting choppier trends and frequent macro reversals. Cryptocurrency-focused strategies, after an exceptional 77.76% gain in 2024, incurred losses of 19.90% in 2025, underscoring the sharp normalisation in digital-asset returns. Finally, Multi-Strategy funds remained among the most consistent performers, posting 7.84% in 2025 following 6.25% in 2024, reinforcing their appeal as diversified, all-weather allocations within institutional portfolios. Figure 7 provides a summary of our SMC indices and comparable benchmarks. Figure 7: Performance of Stone Mountain Capital Strategy Indices & Benchmarks from HFR & HFRI, Sources: Stone Mountain Capital Research, HFR & HFRI, December 2025 Looking ahead to 2026, hedge funds are increasingly treated as structural portfolio building blocks rather than satellite allocations, reflecting a broader rethink of diversification and risk management. As traditional equity–bond correlations have become less reliable in a world characterised by fiscal dominance, policy fragmentation, and geopolitical uncertainty, hedge funds are being positioned to restore diversification at the total-portfolio level by exploiting dispersion, managing regime shifts, and generating returns driven by idiosyncratic factors rather than market direction. This structural role is reinforced by several favourable industry dynamics. Capital raising is on track to reach levels not seen since 2017. Additionally, pension funds are sitting on substantial cash balances with meaningful allocation headroom. Lastly, new fund launches have risen steadily since 2021, with 2025 broadly matching 2024 levels, signalling sustained innovation and manager supply. Together, these trends support the view that hedge funds are evolving into flexible, institutionally scaled diversification engines, capable of adapting portfolios as macro and policy regimes continue to shift. Demand is rising into 2026 because the market environment increasingly favours active, unconstrained strategies. Elevated volatility, uneven global growth, and persistent interest-rate uncertainty have increased dispersion across asset classes, sectors, and securities. These are conditions in which hedge funds have historically performed well. Investors are also responding to the limitations of both long-only assets and illiquid private markets, seeking strategies that combine liquidity, downside resilience, and diversified sources of return. This has led to a renewed focus on uncorrelated hedge fund strategies, complemented by other diversifying return. Overall, the outlook for 2026 reflects a shift from opportunistic hedge fund usage toward deliberate, long-term allocation, driven by the need for resilience and flexibility in an increasingly complex macro and policy landscape. Within this framework, strategy selection becomes central to the hedge fund outlook for 2026, with clear preferences emerging around approaches that can monetise dispersion rather than direction. Discretionary global macro strategies are widely favoured, reflecting their ability to navigate policy divergence, fiscal pressures, geopolitical shocks, and large moves across rates, currencies, and commodities. Equity long/short strategies, particularly those run with lower net exposure and strong risk controls, are also in focus as stock-level dispersion remains elevated and corporate fundamentals increasingly diverge. Multi-strategy platforms continue to attract capital due to their diversified return engines, dynamic capital allocation, and ability to scale across regimes. By contrast, enthusiasm is more selective for highly crowded systematic strategies and single-strategy vehicles, where returns can be vulnerable to rapid regime shifts and manager selection risk is elevated. Outside of credit-focused strategies, which benefit from more contractual cash flows, allocators remain cautious on narrow, directional exposures, reinforcing a preference for flexible, multi-source alpha generation over concentrated or beta-dependent approaches in 2026. Blockchain & Cryptocurrencies Cryptocurrencies delivered another pivotal year in 2025, marked by sharp performance dispersion, deeper institutional integration, and a clear maturation of market structure. Bitcoin and Ethereum remained the dominant assets, benefiting from sustained institutional participation following ETF adoption, while much of the broader altcoin universe lagged, reinforcing a growing quality bifurcation within the market. Volatility remained elevated throughout the year, driven by shifting interest-rate expectations, periodic risk-off episodes, and large liquidations in derivatives markets, yet liquidity proved resilient, with no systemic stress events. At the same time, institutional involvement continued to expand, with digital assets increasingly embedded in portfolio allocation, treasury strategies, and market infrastructure, leaving the crypto market more concentrated, macro-sensitive, and institutional by year-end. Cryptocurrencies entered 2025 with a total market capitalisation of around $3.5tn, before gradually declining through the first quarter amid tighter financial conditions and weaker risk appetite. A turning point came in April 2025, following President Trump’s announcement of global tariffs, after which digital assets recovered rapidly, supported by improved liquidity and renewed risk positioning. The rally extended through the summer, pushing total market capitalisation to nearly $4.5tn by October, with Bitcoin and Ethereum up around 40% at the peak and Solana up roughly 20%. Since then, a pronounced risk-off environment has emerged, driven by renewed macro uncertainty and deleveraging, leading to sustained declines into year-end. Bitcoin and Ethereum are now slightly negative for 2025, while Solana and most other altcoins have fallen sharply, with SOL down close to 40% YTD. Notably, Bitcoin also failed to behave as a digital-gold hedge during this phase, as its performance diverged from traditional safe havens, and the total crypto market cap now sits around $500bn below its level at the start of the year, highlighting persistent fragility and dispersion within the asset class. Figure 8 shows the development of the aforementioned cryptocurrencies throughout 2025. Figure 8: Cryptocurrency Market Capitalization in Billion USD and the Performance of Bitcoin, Ethereum & Solana Since January 2025, Sources: CoinGecko & CoinMarketCap, December 2025 Looking into 2026, forecasts reflect a clear recalibration of expectations after the wide gap between 2025 forecasts and realised outcomes. Entering 2025, projections for Bitcoin ranged broadly from $90k to $225k (excluding more extreme scenarios), underpinned by expectations of clearer regulation, the establishment of a US strategic Bitcoin reserve, and the historical tailwind associated with the post-halving cycle. While key elements of this thesis ultimately materialised - most notably improved regulatory clarity and official-sector recognition of Bitcoin - their impact proved more incremental than transformational, leaving Bitcoin currently around $87k, well below the more optimistic projections. As a result, 2026 forecasts are notably more measured, with average expectations clustering around $140k, a downside scenario near $56k, and an upside case approaching $225k. The base-case outlook is driven by assumptions of gradual institutional adoption rather than step-change inflows, continued but less explosive ETF demand, and Bitcoin increasingly trading as a macro-sensitive asset influenced by liquidity and real rates, rather than purely by halving dynamics. In contrast, the upside case rests on renewed liquidity expansion or accelerated sovereign and corporate adoption, while the downside scenario reflects tighter financial conditions and prolonged risk-off sentiment. Overall, the shift in forecasts underscores a market that has moved from speculative regime change expectations to a more disciplined, fundamentals-driven outlook for 2026. Figure 9 highlights the forecasts of the Bitcoin price for the upcoming year. A more detailed outlook for cryptocurrencies in 2025 is provided by Paul Veradittakit at the end of the Outlook 2025. Figure 9: Bitcoin Price in 2025 with Predictions from 2024 and Expectations for 2026, Sources: CoinMarketCap & Various Forecasts, December 2025 Private Equity & Venture Capital Private equity in 2025 marked a clear transition from stagnation to stabilisation, as the industry adapted to a higher-for-longer rate environment and began to work through the dislocations created in prior years. Deal activity recovered gradually, supported by improving financing conditions, narrowing bid–ask spreads, and growing confidence in macro and policy trajectories. As shown in Figure 10, deal activity is likely to reach significantly high level only behind its record-breaking year in 2021. While promising, this is likely, due to a softening exit environment compared to the past two years alongside alternative exit options for GPs. Exits have shown some early signs of returning to normal levels. At the same time, fundraising remained challenging and increasingly concentrated among large, established managers, reflecting LP caution amid slower distributions and elevated portfolio ages. Rather than a return to pre-2022 dynamics, 2025 was characterised by pragmatism. This includes that value creation shifted toward operational improvement, pricing discipline strengthened, and alternative exit routes, most notably sponsor-to-sponsor sales and continuation vehicles, which became integral to portfolio and liquidity management. Figure 10: Annual Private Equity Deal Count & Deal Value from 2015 to 2025 (as of October 2025 with Estimated Values for November & December), Sources: Pitchbook & Stone Mountain Capital Research, December 2025 Heading into 2026, the private equity outlook is increasingly constructive, driven first and foremost by improving expectations around exits. Nearly 70% of respondents in a PitchBook survey report confidence that the exit environment will improve, a critical development given that constrained exits are widely viewed as the industry’s most pressing challenge, with almost half of respondents citing trapped LP capital and delayed monetisation as the dominant issue. The macroeconomic backdrop is also turning more supportive. Falling interest rates are easing valuation and financing pressures, while the global economy is expected to be calmer and more predictable than in 2025, reducing one of the key sources of uncertainty for dealmaking. Despite this improvement, fundraising conditions remain challenging, as the lack of exits continues to limit distributions and leaves LP capital bound in existing funds, constraining new commitments. At the same time, financing costs, while easing, remain structurally higher than in the prior cycle, reinforcing disciplined underwriting and moderating leverage. Taken together, these dynamics point to a gradual normalisation of private equity activity in 2026, with improving exit prospects and a steadier macro environment offset by ongoing fundraising pressures and a continued emphasis on operational value creation over financial engineering. Secondaries played an increasingly important role across private equity and venture capital in 2025, emerging as a critical liquidity mechanism amid constrained exit markets and prolonged holding periods. With traditional IPO and M&A routes only partially reopened, both LP- and GP-led transactions were used to rebalance portfolios, manage duration risk, and provide selective liquidity to investors facing capital constraints. Looking into 2026, secondaries are expected to become even more integral to the private markets ecosystem, supporting capital recycling, smoothing distributions, and enabling more flexible portfolio construction as exit conditions improve only gradually. Rather than a niche strategy, secondaries are increasingly positioned as a structural component of private equity and venture capital markets, reinforcing stability during the transition toward a more normalised exit environment. In contrast to private equity, venture capital entered 2025 facing a more uneven and volatile adjustment, shaped by sharper valuation resets, slower funding velocity, and a more prolonged recovery in exit activity. While private equity benefited from operational control and cash-flow visibility, venture capital remained more exposed to public market sentiment, technological cycles, and risk appetite, resulting in greater dispersion between winners and underperformers. VC-specific dynamics defined the year. Most notably the concentration of capital into a narrow group of late-stage and AI-focused platforms, the persistence of down rounds, and a heavier reliance on secondary liquidity. As a result, venture capital’s trajectory in 2025 diverged from private equity’s gradual stabilisation, underscoring its higher sensitivity to innovation cycles, capital costs, and exit timing rather than operational value creation. Looking ahead to 2026, venture capital is expected to recover more selectively than private equity, reflecting its greater dependence on improving exit conditions and sustained risk appetite. While easing monetary policy and a calmer macro backdrop should provide support, VC-specific challenges are likely to persist. Among others, this includes elevated valuation dispersion, capital concentration in a small number of category leaders, and slower normalisation of IPO markets. Funding is expected to remain skewed toward later-stage, proven companies and early-stage teams operating in clearly defined innovation pockets, rather than broad-based deployment. Overall, the outlook for venture capital in 2026 points to a gradual and uneven improvement, with returns increasingly driven by disciplined entry pricing, differentiation, and timing rather than a broad cyclical rebound. Artificial intelligence remains one of the most compelling opportunity sets for both private equity and venture capital in 2026, but the investment lens differs meaningfully across the two. For venture capital, AI continues to represent a primary source of new company formation and long-term upside, with capital increasingly directed toward foundational infrastructure, data layers, and agentic systems that enable AI to operate autonomously in real-world, production environments. Unlike venture capital, PE interest is increasingly centred on enterprise and verticalized AI solutions that are embedded into core workflows and deliver measurable returns through cost reduction, productivity gains, and improved pricing power. Rather than paying for abstract “AI optionality,” sponsors are focusing on buy-and-build strategies around AI-enabled software and services, using technology to accelerate integration, optimise operations, and enhance earnings visibility. As valuation discipline tightens, the emphasis is shifting from AI narratives to demonstrable impact on cash flows and margins, reinforcing AI’s role as an operational toolkit rather than a speculative growth driver. Infrastructure and industrial assets are expected to remain key areas of interest for private equity as investors seek resilience, predictable cash flows, and protection against macro volatility. Sectors linked to digital infrastructure, energy transition, logistics, defence, and reshoring trends continue to benefit from long-term structural demand, while easing interest rates improve underwriting conditions for capital-intensive assets. Private equity sponsors are increasingly pursuing platform strategies in fragmented industrial niches, where scale, operational efficiency, and procurement optimisation can drive value creation. In this segment, returns are expected to be driven less by leverage and more by operational execution and strategic expansion. Healthcare and business services continue to offer compelling opportunities for private equity, supported by non-cyclical demand, ageing demographics, and ongoing pressure to improve efficiency and outcomes. These sectors align well with PE’s core strengths, including consolidation in fragmented markets, development of recurring revenue models, and operational enhancement. In healthcare, particular interest lies in technology-enabled services and outsourced solutions that improve productivity and reduce costs, while business services benefit from similar dynamics across compliance, advisory, and back-office functions. Overall, these segments provide a combination of defensive characteristics and scalable growth, making them well suited to disciplined value creation strategies heading into 2026. Fintech Fintech in 2025 navigated a year of volatility and recalibration, emerging more resilient and structurally mature after the excesses of the zero-interest-rate era. The industry shifted decisively away from “growth at any cost” toward profitability, capital discipline, and operational resilience, while funding conditions stabilised in a bifurcated market that rewarded proven, late-stage winners and imposed far higher bars on early-stage capital. Artificial intelligence moved from experimentation to production, particularly in compliance, risk, and back-office workflows, even as investors grew more sceptical of undifferentiated AI narratives and refocused on execution, workflow ownership, and durable moats. At the same time, regulatory attitudes thawed across key jurisdictions, supporting tangible progress in payments, stablecoins, and digital infrastructure, while consolidation accelerated as incumbents and scaled fintechs acquired capabilities rather than building them in-house. Taken together, 2025 marked a transition year in which fintech proved its ability to adapt to tighter financial conditions, laying the groundwork for a more execution-driven and infrastructure-focused phase heading into 2026. These new dynamics in 2025 also showed promising developments in the exit market. While IPO and SPAC exits are still significantly lower than during fintech’s height in 2021/22, there was a noticeable uptick in 2025’s activity. More promisingly, M&A activity in the space has also been steadily increasing and is close to the record highs set during 2021/22. Figure 11 provides more details into these developments. Figure 11: Quarterly Fintech Exits from Q1 2020 to Q3 2025, Sources: Robeco & CB Insights, October 2025 Entering 2026, fintech is positioned against a more constructive macro backdrop, with easing interest rates improving valuation support, funding availability, and investor confidence relative to recent years. Market dynamics are expected to turn more favourable, as capital markets continue to reopen and exit conditions normalise, enabling a healthier IPO pipeline alongside sustained M&A activity driven by both incumbents and scaled fintech platforms. While selectivity remains, funding conditions should gradually broaden beyond a narrow group of late-stage leaders, supporting renewed activity across growth-stage companies. Overall, the sector’s fundamentals point to a more supportive cycle in which improved liquidity, clearer paths to exit, and stabilising macro conditions create a stronger foundation for sustained fintech growth in 2026. Artificial intelligence is expected to be the most transformative force across fintech in 2026, with the focus shifting decisively from experimentation to large-scale deployment. Generative AI is increasingly embedded across banking operations, moving beyond copilots toward agentic systems capable of executing actions rather than merely generating insights. In practice, this means autonomous agents handling complex workflows across onboarding, compliance, customer service, treasury, and risk management, materially reducing cost bases while improving speed and consistency. At the same time, AI-driven fraud detection and financial crime prevention are becoming mission-critical as deepfakes, synthetic identities, and real-time payment rails increase the attack surface. Institutions are therefore prioritising auditable, explainable, and regulator-ready AI systems, reinforcing a shift toward AI as core infrastructure rather than a differentiating feature. Collectively, these dynamics point to 2026 as a year in which AI meaningfully reshapes banking productivity, operating models, and competitive advantages. Stablecoins are expected to move further from speculative instruments toward practical financial infrastructure in 2026, particularly in payments and treasury use cases. Improved regulatory clarity across major jurisdictions is enabling broader institutional adoption, with stablecoins increasingly used for cross-border B2B payments, liquidity management, and settlement, offering faster execution and lower costs than traditional correspondent banking. As adoption expands, stablecoins are likely to coexist with traditional rails rather than replace them outright, reinforcing multi-rail payment architectures and accelerating efficiency gains across global money movement. This trend of increased usage of stablecoins is also clearly visible in the expansive growth of stablecoins, as shown in Figure 12. Even more importantly, the value of stablecoins improved by more than $100bn in 2025, despite the relatively poor performance of digital assets in 2025. Figure 12: Value of Stablecoins from April 2021 to December 2025, Sources: DefiLlama, Robeco & CB Insights, December 2025 Tokenisation is also set to gain momentum in 2026, as financial institutions move from pilots to early-scale implementations across selected asset classes. The tokenisation of real-world assets—such as funds, bonds, and private market instruments—promises improved settlement efficiency, enhanced liquidity, and greater programmability within capital markets. While widespread adoption will take time, growing institutional engagement, clearer legal frameworks, and integration with stablecoin settlement layers suggest that tokenisation will increasingly transition from a long-term concept to a functional component of modern financial infrastructure. Private Debt Private debt delivered a resilient and increasingly differentiated performance in 2025, confirming its role as a core income-oriented asset class amid volatile public markets and a shifting rate environment. While financing costs eased over the course of the year, they remained elevated by historical standards, supporting attractive absolute yields while testing borrower balance sheets and underwriting assumptions. The year was characterised by healthy but several uneven fundamentals. Default rates peaked and began to stabilise. Additionally, corporate balance sheets improved for many issuers following refinancing and deleveraging, yet dispersion widened as weaker credits, particularly those underwritten during the 2020–2021 low-rate period, came under pressure. As a result, performance in 2025 was driven less by broad market beta and more by structure, covenant quality, and manager discipline, marking a transition from a benign credit cycle to a more selective environment. At the strategy level, direct lending remained the backbone of private debt, benefiting from floating-rate structures and strong income generation, though returns became increasingly dependent on underwriting quality as competition intensified and spreads tightened. Mezzanine debt saw more mixed outcomes, with higher return potential offset by rising stress in highly leveraged capital structures and greater sensitivity to refinancing risk. Distressed debt activity increased gradually through the year, but opportunities remained episodic rather than systemic, as defaults stabilised and lenders often opted for amendments and extensions over restructurings. Special situations strategies gained traction, supported by complex recapitalisations, liability-management exercises, and transitional financing needs, where bespoke structuring and lender control proved critical. Specialty finance and asset-backed lending emerged as one of the strongest relative performers, offering diversified cash flows, stronger collateral protection, and lower correlation to traditional corporate credit. Finally, venture debt experienced a cautious recovery, with improved discipline and selective deployment following prior-year stress, as lenders focused on later-stage companies with clearer paths to profitability and tighter covenant frameworks. Looking ahead to 2026, the outlook for private debt is constructive but increasingly nuanced, shaped by a macro environment that is stabilising rather than accelerating. Moderating inflation, easing - but still restrictive - interest rates, and steadier economic growth provide a more predictable backdrop for credit markets, yet refinancing needs are rising and capital remains selective. As a result, the opportunity set is defined less by broad market momentum and more by dispersion across borrowers, sectors, and structures. Private debt continues to benefit from its role as a replacement for bank lending, offering attractive absolute yields and downside protection, but returns are no longer driven by passive carry alone. Instead, 2026 is widely viewed as a “credit picker’s market”, in which underwriting discipline, covenant strength, and structural seniority are decisive, and where successful outcomes depend on the ability to navigate complexity amid a maturing credit cycle. Looking across individual private debt strategies, investor sentiment for 2026 is increasingly differentiated, with capital flowing toward areas perceived as defensive, structurally supported, and capable of navigating dispersion, while more cyclical or subordinated strategies face greater scrutiny. Direct lending remains the most widely held and favourably viewed segment of private credit, continuing to attract core allocations from institutional investors. Its appeal rests on predictable income, floating-rate structures, and its entrenched role as a substitute for bank lending. That said, investors are more discerning than in prior years. Large, sponsor-heavy deals are viewed with caution, while lower-middle-market lending, Europe, and bespoke bilateral structures are seen as more attractive sources of risk-adjusted returns. Manager selection is paramount, and investor confidence is highest in platforms with proven underwriting discipline and workout capabilities. Mezzanine debt is viewed more selectively in 2026. While investors acknowledge its role in filling capital structure gaps amid refinancing pressure, sentiment is mixed due to its higher sensitivity to leverage, valuation risk, and economic slowdowns. Allocations are generally targeted rather than broad-based, favouring managers able to secure strong covenants, pricing power, and structural enhancements such as equity participation. As a result, mezzanine is seen as opportunistic rather than core within private debt portfolios. Distressed debt attracts cautious but growing interest. Investors broadly agree that 2026 is unlikely to produce a systemic distressed cycle. However, rising maturity walls and selective capital availability are expected to generate idiosyncratic opportunities. Capital is therefore being allocated to experienced managers with legal, restructuring, and control-oriented expertise, while more directional or timing-dependent approaches remain less favoured. Special situations strategies are among the more positively perceived areas for 2026. Investors value their ability to monetise complexity through customised structures, transitional capital, and negotiated outcomes, particularly in recapitalisations, carve-outs, and ownership transitions. These strategies are often viewed as offering equity-like upside with debt-like downside protection, making them attractive in a late-cycle environment where flexibility and control are at a premium. Specialty finance and asset-backed lending are increasingly regarded as standout allocations within private debt. Investor appetite is strong due to their collateral-backed nature, diversified cash flows, and lower correlation to traditional corporate credit. Strategies tied to tangible assets, contractual revenues, or granular borrower pools are seen as effective diversifiers, although investors recognise that success depends heavily on specialised underwriting, servicing, and data capabilities. Finally, venture debt is approached with renewed caution in 2026. While investor interest has recovered modestly, allocations remain selective and concentrated in later-stage, sponsor-backed companies with clearer paths to profitability. Early-stage exposure is generally avoided, and venture debt is viewed less as a growth proxy and more as a defensive yield-enhancing complement, appealing primarily to investors seeking exposure to innovation ecosystems with controlled downside risk. Real Estate Real estate experienced a year of recalibration in 2025, as the asset class adjusted to a shifting interest rate environment, evolving demand patterns, and rising operating expenses. While financing costs eased over the course of the year as policy rates began to come down, borrowing conditions remained restrictive by historical standards, continuing to weigh on valuations and transaction activity. As a result, performance in 2025 was shaped less by price appreciation and more by income durability, balance sheet strength, and asset quality, with capital deployment remaining selective across most markets. At the same time, higher non-mortgage costs, such as insurance, taxes, and maintenance, added pressure on cash flows, reinforcing a cautious, reset-driven environment across public and private real estate. Within residential real estate, price growth slowed markedly and activity remained constrained, with affordability pressures limiting demand despite gradually rising inventory. This steadying environment can also be seen in normalizing total returns in the residential housing market. Capital growth has started to accelerate since Q3 2024 and has been relatively stable since then, as shown in Figure 13. Office markets continued to lag, as structural shifts in workspace usage weighed on occupancy and valuations, although signs of stabilisation began to emerge in prime, well-located assets. Industrial and logistics properties remained among the more resilient segments, supported by e-commerce, supply-chain reconfiguration, and long-term leasing demand, even as rental growth moderated from prior peaks. Retail real estate showed improved fundamentals relative to expectations, benefiting from disciplined supply and the strength of necessity-based formats, while discretionary retail remained uneven. Finally, data centres stood out as a clear outperformer, driven by sustained demand from cloud computing, AI workloads, and digital infrastructure investment, positioning the sector as one of the most structurally attractive areas within real estate entering 2026. Figure 13: Global Quarterly Total Returns Since Q1 2021 to Q3 2025, Sources: MSCI Global Quarterly Property Index & Nuveen Real Estate Research, December 2025 Looking ahead to 2026, the outlook for real estate is defined by stabilisation rather than recovery, with the asset class expected to transition from repricing to gradual normalisation. Easing interest rates should continue to improve financing conditions at the margin, supporting transaction activity and sentiment, yet borrowing costs are likely to remain elevated relative to the post-GFC era, limiting the scope for rapid valuation expansion. Price growth is therefore expected to be modest, with total returns increasingly driven by income generation, selective capital appreciation, and operational execution. Structural headwinds, most notably higher insurance costs, property taxes, and regulatory burdens, are set to persist, reinforcing a cautious investment environment in which discipline and asset quality remain paramount. Within this framework, real estate dynamics diverge meaningfully. Residential real estate is broadly aligned with the stabilisation narrative, with modest price gains and a gradual pickup in transaction volumes as affordability improves incrementally, though rental growth is expected to slow amid rising supply. Office markets remain the primary outlier, where structural demand uncertainty continues to weigh on performance despite early signs of bottoming in high-quality assets. Industrial and logistics assets are expected to remain comparatively resilient, supported by long-term demand from e-commerce and supply chain reconfiguration, albeit with slower rent growth than in prior years. Retail real estate is likely to continue outperforming expectations, benefiting from constrained supply and solid fundamentals in necessity-based formats, while discretionary segments remain uneven. Data centres stand apart from the broader cycle, with demand driven by cloud adoption and AI infrastructure investment, positioning the sector as structurally advantaged and less sensitive to near-term macro conditions as the real estate market moves through 2026. VeradiVerdict: 2026 Crypto Predictions by Paul Veradittakit Before I share my 2026 predictions, I want to reflect on the eight I made for 2025 to check their accuracy. You can read my reasoning for these predictions in more detail at VeradiVerdict. I awarded myself these subjective self-scores for my eight predictions from 2025, ranking each of my predictions from a 1 (least accurate) through a 5 (most accurate). Results broke down pretty evenly across the rating range with no 1s and two of each of these: 2, 3, 4, and 5.  #1 RWA Growth Prediction: By year-end, RWAs (excluding stablecoins) will account for 30% of onchain TVL. Score: 3 out of 5 When I made this prediction, RWAs excluding stablecoins represented 15% of onchain TVL at $13.7 billion. As of December 15, 2025, the amount reached ~16% of TVL at $16.6 billion out of a DeFi TVL of $118 billion. So, while the RWA sector has expanded, it remained at a relatively consistent share of onchain TVL. Top sectors include the following: Tokenized Treasures: $8.7 billion Tokenized Commodities: $3.2 billion Tokenized Private Credit: $2.4 billion Tokenized Institutional Funds: $2.4 billion  #2 Bitcoin-Fi Prediction: 1% of Bitcoins will participate in Bitcoin-Fi. Score: 4 out of 5 In this case, I actually underestimated the participation percentage. The total percentage of Bitcoin-Fi is 1.4% of the 19.9 million supply as of December 13. Bitcoin’s early stage liquid staking market is currently at $2.5 billion. Projects have included Babylon, Lombard, Arch Network and Mezo. Another use case is lending and borrowing with more than $1 billion in BTC-backed loans taking place in 2025 by Ledn, a billion-plus by Unchained, and a billion-plus by Coinbase. Key developments included the Babylon-Aave partnership, tBTC credit markets, and stacks ecosystem powered by ALEX Lab, Zest Protocol, and other applications.  #3 Fintechs as Crypto Gateways Prediction: Fintechs will grow in prevalence and may perhaps rival smaller centralized exchanges in crypto holdings. Score: 5 out of 5 During 2025, fintechs first rivaled smaller centralized exchanges and then went on to surpass them. Robinhood, at $51 billion according to company reporting, would already exceed the holdings of mid-tier CEXs with Bitfinex at $20.7 billion still standing as a smaller exchange. This shift reflects fintechs’ structural advantages in user acquisition, regulatory positioning, and integrated financial services.  #4 Unichain L2 Dominance Prediction: Unichain becomes the leading L2 by transaction volume. Score: 2 out of 5 When looking at Stage 1 L2s in December, Unichain ranks sixth with $260.14 million in total value secured. Above Unichain was: Arbitrum One with $17.29 billion TVS Base Chain with $12.11 billion TVS OP Mainnet with $2.24 billion TVS Starknet with $752.57 million TVS Ink with $396.63 million TVS  #5: NFT Application-Specific Resurgence Prediction: Flexibility is what brings NFTs power. The use-cases will only increase. Score: 2 out of 5 Use case types did grow across sectors in 2025, but NFTs as a whole have faced adoption headwinds. Once used largely for speculative art, practical applications of NFTs now include: Gaming ($0.54 trillion market) like World of Dyplans, Pixels, and Seraph Ticketing ($1.1 billion market) like OPEN Ticketing Ecosystem, GUTS Tickets, and SeatlabNFT RWA tokenization like Propy, RealT, and Lofty Decentralized identity systems like Ethereum Name Service, Lens Protocol, and Galxe Engagement depth has increased with unique active wallets at 2.1 million in Q3 with traders having an average of 8.4 NFTs per wallet compared to 4.2 in Q1.  #6 Restaking Launches Prediction: Restaking protocols like Eigenlayer, Symbiotic, and Karak will finally launch their tokens, which would pay operators from AVS and slashing. Score: 3 out of 5 Restaking in the intended instantiation hasn’t seen as much adoption as intended and, instead, we’ve seen prominent restaking protocols expand into adjacent businesses. EigenLayer/EigenCloud did activate its slashing mechanism on April 17, 2025 and is fully operational. In the fall, they also launched EigenAI and EigenCompute on mainnet alpha to expand beyond infrastructure into AI/compute workloads. Symbiotic, however, expanded to insurance, and most restaking protocols have not launched because of a TVL decrease.  #7 zkTLS Trend Prediction: zkTLS will bring offchain data on-chain, powering new use cases for DeFi / Fintech and data verification in various industries and use cases. Score: 5 out of 5 zkTLS already has multiple live product implementations, including these launches: TransCrypts launched in 2024 for income and identity verification. Accountable in May 2025 for verification of financial data between counterparties. Earnifi launched in 2025 for improved EWA underwriting. DaisyApp launched in 2025 for verifiable influencer marketing and attribution. 3Jane in private beta now for proof of assets and identity to underwrite uncollateralised loan. EarnOS for verified user acquisition and attribution. We’re seeing zkTLS implemented in areas of verification.  #8 Encouraging Regulatory Environment Prediction: We’ll see a winding down of SEC lawsuits, clear definitions of crypto as a particular asset class, and tax considerations. Score: 5 out of 5 This three-part prediction came with the following levels of accuracy. First, major SEC lawsuits did wind down in 2025, including ones against Ripple, Binance, Coinbase, Kraken, and more. All but Ripple concluded without financial penalties with Ripple’s coming with a $125 million penalty. The year 2025 saw significant regulatory progress but did not provide clear definitions of crypto as a particular asset class. The Digital Asset Market Clarity Act passed through the House in July and is now under consideration by the Senate. This Act would give the CFTC jurisdiction over decentralized tokens and the SEC jurisdiction over centralized/investment tokens. Meanwhile, the SEC released a preliminary, nonbinding token taxonomy in November. Part three of the prediction, clear tax guidance, came close but didn’t happen. Although foundational clarity on digital assets lays out how they are property, subject to capital gains and ordinary income rules, ambiguities still exist in areas like DeFi broker reporting and non-custodial transactions. Areas of progress include phased implementations of mandatory broker reporting that became effective this year; staking safe harbors for publicly traded trusts/ETFs in November; and ongoing stablecoin regulatory development, post-GENIUS Act. Moreover, in 2025 the U.S. administration named a crypto czar, created a bitcoin strategic stockpile, formed a digital asset working group, and selected a new SEC chair that embraces innovation. Nine Predictions for 2026 #1 Real-World Assets (RWA) Takes-Off As of December 15, 2025, the amount reached ~14% of TVL at $16.6 billion out of a DeFi TVL of $118 billion. Prediction: Treasuries and private credit could at least double. Tokenized stocks and equities could grow even faster when the anticipated “Innovation Exemption” under the SEC’s “Project Crypto” debuts. One surprise sector (carbon credits, mineral rights, or energy projects) will catch fire. This sector will likely be characterized by fragmented liquidity, global distribution, and a lack of standards, which blockchain-based markets will help resolve. #2 AI Revolutionizes On-Chain Security AI security and blockchain development tools are getting scary good. Real-time fraud detection, 95% accurate transaction Bitcoin labeling, and instant smart-contract debugging are here, detecting millions in blockchain vulnerabilities. Prediction: In 2026, picture bigger shifts toward on-chain intelligence with deterministic, verifiable rules taking over smart contract-based governance. The application will scan code in near real-time, spot logic bugs and exploits instantly, and give immediate debugging feedback. The next big unicorn will be an innovative onchain security firm that will 100x the safety game. #3 Prediction Markets Are Acquisition Targets With $28 billion traded in 2025’s first ten months, prediction markets are consolidating around institutional infrastructure. We hit an ATH the week of October 20 at $2.3 billion. Prediction: A buyout in the industry of more than $1 billion, one that will not involve Polymarket or Kalshi. Winning platforms will build under-the-hood liquidity rails with baked-in market-discovery intelligence that points out where money is hiding and why. Forget shiny new buttons. It’s all about effortlessly giving users superpowers: instant access to hidden pools, smarter routing, and predictive order flow. Sports-focused platforms like DraftKings and FanDuel have gone mainstream, partnering with media for real-time odds distribution. Newer entries like NoVig, focused on sports, will expand their presence vertically, and new startups will emerge in APAC, as that is a region to watch. #4 AI Becomes Your Personal Crypto Co-Pilot Consumer AI platform usage will surge as systems mature, delivering hyper-personalized experiences that meet tailored expectations. Seamless integration makes advanced AI feel effortless, shifting usage from clunky to instant Prediction: Platforms like Surf.ai will engage people from crypto-curious individuals to active traders in 2026 via intuitive advanced AI models, proprietary crypto datasets, and multi-step workflow agents. I believe that sophisticated technology and accessible design positions Surf as the go-to crypto research tool, delivering instant, on-chain-backed market insights 4× faster than generic options with other platforms of this type also emerging. #5 Bank Titans Gear Up: G7-Pegged Stablecoin Looms Ten major banks are in the early stages of exploring a consortium stablecoin issuance pegged to G7 currencies. The financial institutions are determining whether an industry-wide stablecoin would likely provide people and institutions with the benefits of digital currencies in compliant, risk-managed ways. Meanwhile, a group of ten European banks are investigating the issuance of a euro-pegged stablecoin. Prediction: A consortium of major banks will release their own stablecoin (whether these pilot projects come to fruition in 2026 or a different consortium does). #6 Privacy, Payments, Perpetuals: The Institutional Trio Privacy tech is booming in institutional usage with the transparency-secrecy combination of Zama, Canton, and other protocols although retail usage isn’t finding traction or scalability. Stablecoins sit at $310 billion today, more than doubling market cap since 2023, expanding for 25 months in a row. Perpetual swap contracts already make up ~78% of crypto derivative volume, and the gap keeps growing between perps and spot options. Prediction: For privacy, the gap between institutional and retail will widen in 2026. Stablecoins will have a path to $2 trillion+ long-term, hitting at least $500 billion next year, and the momentum for perpetuals will continue in 2026. #7 The Institutional Macro View As of December 15, 17.867% of BTC holdings now rest in the hands of publicly traded and private companies, ETFs, and countries. Prediction: 2026 won’t be about hype or memes. It will be about consolidation, real compliance, and institutional money being driven by public market liquidity. Crypto will integrate in mainstream platforms, upgrade financial rails, and challenge current incumbents. #8 The Biggest Crypto IPO Year Ever 2025 already had 335 U.S. IPOs, overall, an increase of 55% from 2024; many of those were crypto-friendly, including nine blockchain IPOs. This includes crypto-native ones like Circle Internet Group with a launch date of May 27, 2025 and crypto-inclusive ones like SPACS; Bitcoin Infrastructure Acquisition Corp, for example, launched on December 2, 2025. Prediction: 2026 will be an even bigger year for digital asset public listings. Coinbase says that 76% of companies plan to add tokenized assets in 2026 with some eyeing 5%+ of their entire portfolio. Morpho serves as an example protocol with its $8.6 billion TVL in November 2025. #9 Digital Asset Treasury Consolidation Accelerates Back in 2021, fewer than ten public companies owned Bitcoin. Fast-forwarding to mid-December, 151 public companies own $95 billion with the number rising to 164 and $148 billion when including governments. Predictions: 2026 will see brutal pruning. In each major asset class, only one or two players will dominate. Everyone else gets acquired or left behind except for a longer-tail token winner going along for the ride. It’s going global, too. Japan’s Metaplanet is already aggressive, so the U.S. no longer owns the trend as the global treasury landscape diversifies. Paul Veradittakit | Managing Partner E : [email protected] M : +1 415 494 9001 Paul is a Managing Partner at Pantera Capital, where he works since more than ten years. He is an allrounder with several different activities and is highly interested in the blockchain technology. Furthermore, he is a board member at Blockfolio and at Staked. He also works as advisor for several companies, such as Ampleforth, Audius and Al Foundation. Pantera Capital was the first investment firm focused exclusively on bitcoin, other digital currencies, and companies in the blockchain tech ecosystem. Pantera manages over $4.3 billion across three strategies – passive, hedge, and venture. 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