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IOSG Founder: Cryptocurrency's 2025 Performance Will Be 'Nasty,' But It Marks the Beginning of a New Cycle
Original Title: "2025: The Darkest Year of the Crypto Market, Yet the Dawn of the Institutional Era"
Original Author: Jocy, Founder of IOSG Venture
This is a fundamental shift in market structure, while most are still using old-cycle logic to view the new era.
Looking back at the 2025 crypto market, we see a paradigm shift from retail speculation to institutional allocation, with core data showing institutions holding 24% of the market, while retail exits 66% — — the 2025 crypto market turnover is complete. Forget about the four-year cycle; the crypto market of the institutional era has new rules! Let me break down the truth behind this "worst year" with data and logic.
Surface Data: 2025 Asset Performance
Let's first look at surface data — — the 2025 asset performance. Traditional assets: Silver +130%, Gold +66%, Copper +34%, Nasdaq +20.7%, S&P 500 +16.2%. Crypto assets: BTC -5.4%, ETH -12%, major altcoins -35% to -60%. Looks grim, right? Keep reading.
But if you only look at prices, you'll miss the most important signal. Although BTC is -5.4% for the year, it hit a new all-time high of $126,080 during the period. More importantly: what happened while the price was dropping? BTC ETF saw a net inflow of $25 billion in 2025, with a total AUM of $1,140–1,200 billion and institutional holdings accounting for 24%. Some are panicking, some are buying.
First Key Observation: Market Dominance Has Shifted from Retail to Institutions
The approval of BTC spot ETF in January 2024 was a turning point. The market previously dominated by retail and OGs is now led by macro investors, corporate treasuries, sovereign funds. This is not a simple shift in participants but a rewriting of the game rules.
Data supports this observation: BlackRock IBIT reached $500 billion AUM in 228 days, becoming the fastest-growing ETF in history. It now holds 780,000–800,000 BTC, surpassing MicroStrategy's 670,000 BTC. Grayscale, BlackRock, and Fidelity account for 89% of the BTC ETF's total assets. 13F hedge fund filings show that 86% of institutional investors hold or plan to allocate to digital assets. BTC's correlation with the S&P 500 increased from 0.29 in 2024 to 0.5 in 2025.
Take a look at BlackRock and MicroStrategy's aggressive strategies. BlackRock's IBIT market share of the BTC ETF is approximately 60%, with a holding of 800,000 BTC surpassing MicroStrategy's 671,268 BTC. Institutional participation continues to rise: 13F filing institution holdings account for 24% of ETF total AUM (Q3 2025); more professional institutional investors make up 26.3%, up 5.2% from Q3; major asset management companies hold 57% of 13F BTC ETF holdings, hedge fund institutions hold 41% of BTC ETF, together reaching close to 98% — indicating that current institutional holdings are mainly held by these two types of professional investors, not including more conservative institutions such as pension funds and insurance companies (which may still be observing or just starting to allocate); FBTC institutional holdings reach 33.9%.
Key institutional investors include the Abu Dhabi Investment Council (ADIC), Mubadala Sovereign Wealth Fund, CoinShares, Harvard University Endowment Fund (holding $116 million in IBIT), and others. Large traditional brokers and banks have also increased their holdings of Bitcoin ETFs. U.S. Bank reports holdings of $491 million, Morgan Stanley reports $724 million, JPMorgan reports $346 million. This shows that Bitcoin ETF products are being continuously integrated by major financial intermediaries. The question arises: why are institutions continuously accumulating at a "high level"?
Because they are looking at the cycle, not the price
After March 2024, Long-Term Holders (LTH) have sold a cumulative 1.4 million BTC, worth $121.17 billion. This unprecedented supply release. But miraculously — the price did not collapse. Why? Because institutions and corporate treasuries absorbed all of this selling pressure.
Three waves of selling by long-term holders: from March 2024 to November 2025, long-term holders (LTH) collectively sold approximately 1.4 million BTC (worth $121.7 billion).
· First wave (end of 2023 - early 2024): ETF approved, BTC $25K→$73K;
· Second wave (end of 2024): Trump elected, BTC surges towards $100K;
· Third wave (2025): BTC remains above $100K long-term.
Unlike the single explosive distributions in 2013, 2017, and 2021, this time it is a sustained multi-wave distribution. Over the past year, we have been in a consolidation phase at the BTC peak, a situation that has never occurred before. BTC that has not moved in over 2 years has decreased by 1.6 million since early 2024 (about $140 billion), but the market's absorption capacity has increased.
Meanwhile, what are retail investors doing? The number of active addresses continues to decline, Google searches for "Bitcoin" have dropped to an 11-month low, $0-$1 small transaction volume has decreased by 66.38%, and $10 million or higher large transactions have increased by 59.26%. River estimates that retail investors will net sell 247,000 BTC (about $23 billion) in 2025. Retailers are selling, institutions are buying.
This leads to the second key observation: This is not the "top of the bull market" but the "institutional accumulation period."
Traditional cycle logic: Retail frenzy → Price surge → Collapse → Reboot. New cycle logic: Institutional steady allocation → Narrowing volatility → Price center rising → Structural uptrend. This explains why the price is ranging, but the inflow of funds does not stop.
The policy environment is the third dimension. The Trump administration in 2025 has already taken action: the Crypto Executive Order (signed on 1/23), a strategic Bitcoin reserve (~200k BTC), the GENIUS Act stablecoin regulatory framework, and a change in SEC chairman (Atkins taking office). Pending: Market Structure Bill (77% probability of passing by 2027), stablecoins buying short-term treasuries (10x growth in the next three years).
Potential impact of the 2026 midterm elections: 435 House seats and 33 Senate seats are up for election in 2026. In 2024, 274 "pro-crypto" candidates were elected, but banking lobby groups plan to spend $100M+ countering crypto-friendly donations. Polls show that 64% of crypto investors believe a candidate's crypto stance is "very important." Unprecedented policy friendliness.
But there is a timing issue: the November 2026 midterm elections. Historical pattern: "Election year policies take precedence" → Policy-intensive implementation in the first half of the year → Waiting for election results in the second half of the year → Increased volatility. Therefore, the investment logic should be: 1st half of 2026 = Policy honeymoon period + Institutional allocation = bullish; 2nd half of 2026 = Political uncertainty = increased volatility.
Why is 2025 the "worst" year for crypto performance, yet I remain optimistic?
Now back to the initial question: Why did crypto "perform the worst" in 2025, but I am still optimistic? Because the market is undergoing a "handover": from retail to institutional, from speculative chips to strategic chips, from short-term speculation to long-term holding. This process inevitably involves price adjustments and volatility.
How to interpret institutional target prices?
· VanEck: $180,000;
· Standard Chartered: $175,000-$250,000;
· Tom Lee: $150,000;
· Grayscale: All-time high in the first half of 2026.
This optimism is not blind but based on: continuous ETF inflows, corporate treasury DCA accumulation (134 companies globally hold 1.686M BTC), an unprecedented U.S. policy window, and just the beginning of institutional allocation.
Of course, risks remain: macro-wise with Fed policy and a strong US dollar; regulatory-wise, the market structure bill may face delays; market-wise, long-term holders may continue selling; politically, uncertainty in midterm election results. But the other side of risks is opportunities. When everyone is bearish, it is often the best time to position.
Final investment thesis: Short-term (3–6 months): Range-bound between $87K-$95K, institutions continue to accumulate; Mid-term (first half of 2026): Policy + institutional drive, targeting $120K-$150K; Long-term (second half of 2026): Increased volatility, watching election results and policy continuity.
Core Judgment: This is not a cycle top but the beginning of a new cycle
Why am I confident in this? Because history tells us: 2013 was retail-driven, peak at $1,100; 2017 was ICO frenzy, peak at $20,000; 2021 was DeFi+NFT, peak at $69,000; 2025 saw institutional entry, currently at $87,000. Each cycle, participants are more professional, funds are larger, and infrastructure is more robust.
The "worst performance" in 2025 is fundamentally a transition period from the old world (retail speculation) to the new world (institutional allocation). The price is the cost of transition, but the direction is already set. When BlackRock, Fidelity, and sovereign wealth funds are accumulating on the left, retail is still hesitating about "will it drop further." This is the cognitive gap.
Summary
In conclusion: 2025 marks the acceleration of the institutionalization process in the crypto market. Despite BTC's negative annual return, ETF investors have shown strong "HODL" resilience. What appeared to be the worst year for crypto in 2025 is actually: the largest-scale supply turnover, the strongest institutional willingness to allocate, the clearest policy support, and the most extensive infrastructure improvement. Price down by 5%, but ETF inflows $25 billion. This, in itself, is the most significant signal.
As a long-time practitioner and investor, our work is not to predict short-term prices, but to identify structural trends. Key points for 2026 include: progress on market structure legislation, potential strategic Bitcoin reserve expansion, and policy continuity post-midterm elections. Looking ahead, the improvement of ETF infrastructure and regulatory clarity have laid the foundation for the next leg up.
When market structure undergoes a fundamental change, old valuation logic becomes obsolete, and new pricing power is rebuilt. Stay rational, stay patient.
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The X Chat will be available for download on the App Store this Friday. The media has already covered the feature list, including self-destructing messages, screenshot prevention, 481-person group chats, Grok integration, and registration without a phone number, positioning it as the "Western WeChat." However, there are three questions that have hardly been addressed in any reports.
There is a sentence on X's official help page that is still hanging there: "If malicious insiders or X itself cause encrypted conversations to be exposed through legal processes, both the sender and receiver will be completely unaware."
No. The difference lies in where the keys are stored.
In Signal's end-to-end encryption, the keys never leave your device. X, the court, or any external party does not hold your keys. Signal's servers have nothing to decrypt your messages; even if they were subpoenaed, they could only provide registration timestamps and last connection times, as evidenced by past subpoena records.
X Chat uses the Juicebox protocol. This solution divides the key into three parts, each stored on three servers operated by X. When recovering the key with a PIN code, the system retrieves these three shards from X's servers and recombines them. No matter how complex the PIN code is, X is the actual custodian of the key, not the user.
This is the technical background of the "help page sentence": because the key is on X's servers, X has the ability to respond to legal processes without the user's knowledge. Signal does not have this capability, not because of policy, but because it simply does not have the key.
The following illustration compares the security mechanisms of Signal, WhatsApp, Telegram, and X Chat along six dimensions. X Chat is the only one of the four where the platform holds the key and the only one without Forward Secrecy.
The significance of Forward Secrecy is that even if a key is compromised at a certain point in time, historical messages cannot be decrypted because each message has a unique key. Signal's Double Ratchet protocol automatically updates the key after each message, a mechanism lacking in X Chat.
After analyzing the X Chat architecture in June 2025, Johns Hopkins University cryptology professor Matthew Green commented, "If we judge XChat as an end-to-end encryption scheme, this seems like a pretty game-over type of vulnerability." He later added, "I would not trust this any more than I trust current unencrypted DMs."
From a September 2025 TechCrunch report to being live in April 2026, this architecture saw no changes.
In a February 9, 2026 tweet, Musk pledged to undergo rigorous security tests of X Chat before its launch on X Chat and to open source all the code.
As of the April 17 launch date, no independent third-party audit has been completed, there is no official code repository on GitHub, the App Store's privacy label reveals X Chat collects five or more categories of data including location, contact info, and search history, directly contradicting the marketing claim of "No Ads, No Trackers."
Not continuous monitoring, but a clear access point.
For every message on X Chat, users can long-press and select "Ask Grok." When this button is clicked, the message is delivered to Grok in plaintext, transitioning from encrypted to unencrypted at this stage.
This design is not a vulnerability but a feature. However, X Chat's privacy policy does not state whether this plaintext data will be used for Grok's model training or if Grok will store this conversation content. By actively clicking "Ask Grok," users are voluntarily removing the encryption protection of that message.
There is also a structural issue: How quickly will this button shift from an "optional feature" to a "default habit"? The higher the quality of Grok's replies, the more frequently users will rely on it, leading to an increase in the proportion of messages flowing out of encryption protection. The actual encryption strength of X Chat, in the long run, depends not only on the design of the Juicebox protocol but also on the frequency of user clicks on "Ask Grok."
X Chat's initial release only supports iOS, with the Android version simply stating "coming soon" without a timeline.
In the global smartphone market, Android holds about 73%, while iOS holds about 27% (IDC/Statista, 2025). Of WhatsApp's 3.14 billion monthly active users, 73% are on Android (according to Demand Sage). In India, WhatsApp covers 854 million users, with over 95% Android penetration. In Brazil, there are 148 million users, with 81% on Android, and in Indonesia, there are 112 million users, with 87% on Android.
WhatsApp's dominance in the global communication market is built on Android. Signal, with a monthly active user base of around 85 million, also relies mainly on privacy-conscious users in Android-dominant countries.
X Chat circumvented this battlefield, with two possible interpretations. One is technical debt; X Chat is built with Rust, and achieving cross-platform support is not easy, so prioritizing iOS may be an engineering constraint. The other is a strategic choice; with iOS holding a market share of nearly 55% in the U.S., X's core user base being in the U.S., prioritizing iOS means focusing on their core user base rather than engaging in direct competition with Android-dominated emerging markets and WhatsApp.
These two interpretations are not mutually exclusive, leading to the same result: X Chat's debut saw it willingly forfeit 73% of the global smartphone user base.
This matter has been described by some: X Chat, along with X Money and Grok, forms a trifecta creating a closed-loop data system parallel to the existing infrastructure, similar in concept to the WeChat ecosystem. This assessment is not new, but with X Chat's launch, it's worth revisiting the schematic.
X Chat generates communication metadata, including information on who is talking to whom, for how long, and how frequently. This data flows into X's identity system. Part of the message content goes through the Ask Grok feature and enters Grok's processing chain. Financial transactions are handled by X Money: external public testing was completed in March, opening to the public in April, enabling fiat peer-to-peer transfers via Visa Direct. A senior Fireblocks executive confirmed plans for cryptocurrency payments to go live by the end of the year, holding money transmitter licenses in over 40 U.S. states currently.
Every WeChat feature operates within China's regulatory framework. Musk's system operates within Western regulatory frameworks, but he also serves as the head of the Department of Government Efficiency (DOGE). This is not a WeChat replica; it is a reenactment of the same logic under different political conditions.
The difference is that WeChat has never explicitly claimed to be "end-to-end encrypted" on its main interface, whereas X Chat does. "End-to-end encryption" in user perception means that no one, not even the platform, can see your messages. X Chat's architectural design does not meet this user expectation, but it uses this term.
X Chat consolidates the three data lines of "who this person is, who they are talking to, and where their money comes from and goes to" in one company's hands.
The help page sentence has never been just technical instructions.
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