Written by: 0xJeff
Compiled by: Tia, Techub News
2025 is a challenging year—despite the U.S. President's promise to make the U.S. the global capital of cryptocurrency and artificial intelligence, the cryptocurrency industry is struggling this year.
Since Trump took office in January, we have experienced one stressful moment after another, with one particularly severe instance being the flash crash in October, which paralyzed the crypto industry.
Although the ripple effects of the flash crash have not yet dissipated, the macroeconomic backdrop and favorable industry factors suggest that this quarter's performance will improve, and the outlook for 2026 is relatively optimistic.
In this article, we will delve into six major trends shaping cryptocurrency behind the scenes, giving you a glimpse of what might happen in 2026.
- ### Prediction Markets = Crypto Options PMF
Prediction markets (PM) as an industry have recently set a new historical high for nominal weekly trading volume, first reaching $3 billion two weeks ago.
We see the market types continuously expanding—politics, sports, esports, pop culture, mention markets, macroeconomics, cryptocurrency, finance, yields, technology, and more.
While @Polymarket and @Kalshi serve as comprehensive prediction markets covering all hot topics, newer PM projects like @trylimitless and @opinionlabsxyz focus more on niche areas—Opinion is entirely centered on macro, providing interest rates for the U.S., Europe, and Japan; Limitless focuses on the crypto market, covering a broader range of crypto assets and different timeframes.
Crypto options were all the rage during the bull market of 2021 but saw a significant decline due to various challenges. The main challenges were user interface/user experience issues and insufficient liquidity.
Prediction markets provide what options lack: excellent UI/UX, allowing anyone to bet on anything (no financial knowledge required) + guiding funds by creating exciting markets, enabling anyone to be a market maker or taker (betting Yes or No). There’s no need to understand all the Greek letters or options terminology; you just need to simply buy Yes/No shares.
And just like options, people are using prediction markets as a hedging tool for their core asset exposure.
Got a large airdrop but want to hedge risk? Then buy No shares in that market.
Too many long positions in your portfolio? Don’t buy any shares in the macroeconomic or Bitcoin market.
You get the idea.
Prediction markets are rebranded options products that can reach the masses—anyone can participate and benefit. One of the main beneficiaries is the machine learning/prediction teams.
- ### Prediction Markets = Ideal Testing Ground for Machine Learning Teams
Teams like @sportstensor, @SynthdataCo, @sire_agent, @AskBillyBets are fully committed to optimizing signals in prediction markets.
Sportstensor serves as a liquidity provision layer for Polymarket, allowing any prediction market trader to participate in prediction competitions and contribute signals. The best-performing signals will earn you alpha token rewards. The best-performing signals will be used to continuously improve Sportstensor's prediction signals for future profitability.
Synth positions itself as a high-frequency trading prediction market hedge fund. It uses Synth's prediction signals to forecast the prices of crypto assets over 1 hour and 24 hours, trading in the cryptocurrency market on prediction markets. Initial results show a return on investment of up to 500% within a month ($3,000 → $15,000).
Sire is building an Alpha version treasury, placing bets in the sports betting market using the Sire model based on SN44 scoring data. Reportedly, its initial returns will exceed 600%. This is the best private equity DeFi treasury product on the market, set to launch soon.
Billy utilizes its sports betting insights (BCS) to provide analytics and automated betting features. The team is exploring its advantages in providing liquidity for Kalshi's parlay betting. They plan to expand this strategy and scale up funding (once the funding reaches a certain level, future profits will be returned to token holders).
The allure of prediction markets lies in the many Darwinian-style AI competitions currently underway (or about to begin), where machine learning teams can participate and validate their strategies in real-world environments.
Synth, Sire, and Billy can all participate in the Sportstensor competition, which will start soon. Shortly, @aion5100 and @futuredotfun will launch "Market Wars" on Polymarket and Kalshi.
The coolest part is that Polymarket is hinting at Poly tokens + new prediction market offerings with token incentives to attract liquidity and trading volume. ML teams can discover mispricing/arbitrage opportunities while mining tokens.
Does this remind you of the early days of Hyperliquid?
It's happening again, but the stage has shifted from perpetuals to prediction markets.
- ### The New Digital Banking (Neobank) War is On
We are witnessing a shift where large Web2 startups and enterprises are launching L1/L2 level services and integrating stablecoin payment channels to serve users directly. Meanwhile, crypto-native projects are also actively expanding real-world financial services.
Teams like @etherfi, @useTria, @AviciMoney, @URglobal now offer non-custodial crypto spending cards, allowing users to make real-world payments directly with their crypto balances.
In less than a year, this market has transformed from a blue ocean into a crowded battlefield, with over 20-30 serious players vying for the same batch of crypto users.
Current differentiation directions include:
Cashback/discount percentages—Tria excels in this area, offering the highest cashback rates but requires an annual fee.
Forex trading, transfer, and ATM fees.
Benefits (travel, hotel memberships, VIP lounges, event tickets).
Yields/DeFi integration (idle fund yields, borrowing for spending, etc.)—EtherFi perfectly exemplifies this strategy with high yields and borrowing for spending features.
Despite this, most of these products use the same underlying infrastructure. They rely on partner banks/card issuers holding Visa/Mastercard licenses, positioning credit cards as the front-end user acquisition layer rather than a true neobank.
Therefore:
Compliance is controlled by the issuer/bank partner, not the project itself.
User balances are virtual balances, not full bank accounts.
Most services are limited to "cryptocurrency spending," with no fiat withdrawal or banking functions.
Currently, this situation is acceptable as everyone faces the same limitations. However, as competition intensifies, the ability to become a true bank may be the real advantage.
Projects with their own compliance and regulatory frameworks will be able to offer real bank accounts, support multi-currency deposits and withdrawals, and seamlessly integrate with both cryptocurrency and traditional financial systems.
In this regard, UR (from the Mantle ecosystem) is in a leading position, having operated under the supervision of the Swiss Financial Market Supervisory Authority (FINMA) and obtained a Swiss banking license, supporting seven fiat currencies as well as real-world and crypto financial services (users can deposit and withdraw funds in seven currencies through traditional banking channels).
- ### Breakthrough Applications/Use Cases for Cryptocurrency are Clearer than Ever
Trading
Prediction
DeFi yield farming
Stablecoins
Asset tokenization
We have experienced a transition from CEX to spot DEX to Perp DEX, with Hyperliquid finally emerging.
The super speculation wave led by Pumpdotfun has propelled a plethora of new narratives on Launchpad.
Prediction markets are rapidly developing, making their first real entry into the mainstream market (we haven't seen such viral spread since the NFT era, when people were still mocking those ugly JPEGs).
DeFi, with its structured yield products, interest products, stablecoins, RWA/DePIN, and tokenization technologies, is gradually penetrating Wall Street and establishing its position as a key pillar of cryptocurrency. People are realizing they can own a piece of the future and profit from it (even using it to borrow funds).
As centralized exchanges (CEX) launch wallet super apps like Base app, Binance, OKX, all key cryptocurrency application scenarios are being reinforced. Other exchanges are also expanding their wallet functionalities to make it easier for ordinary users. Initial Coin Offerings (ICOs) are making a comeback—Coinbase has launched the first Monad ICO project, while other issuance platforms (like Legion, Kaito) are also seeing their user bases grow.
- ### Crypto AI has Found Its Initial Product-Market Fit (PMF).
The early stages of crypto AI were filled with various AI meme coins and GPT wrappers sold under the guise of "AI agents." But those days are long gone.
Now, blockchain tracks and stablecoins are driving commercial activities between agents, while cryptographic technologies like TEE and zk proofs, combined with token economics mechanisms (incentives and penalties), give AI systems verifiability and determinism.
Support stacks such as x402, ERC-8004, programmable wallets, metering/billing frameworks, verifiable reasoning/computation, and other extensions are laying the groundwork for trustless, continuous, and secure collaboration between AI and humans (the infrastructure enables AI and humans to trade and collaborate seamlessly anytime and anywhere, with safeguards in place to prevent AI hallucinations and loss of control).
Meanwhile, Darwinian AI has evolved into a compelling meta-layer gamified competition that evolves AI/agents through real-world incentive mechanisms, enhancing signal quality and improving performance. So far, the most successful applications have revolved around trading and prediction signals, which align directly with the core DNA of cryptocurrency.
The ecosystem is increasingly adopting this Darwinian model, utilizing token incentives to attract builders, reward contributors, and subsidize R&D, thereby creating higher-quality AI products. Although the Bittensor ecosystem is still in its early stages, its top subnet has shown remarkable development momentum.
Despite these advancements in crypto AI projects and improved product-market fit, the performance of their tokens has not kept pace, with most tokens trading 30% to 90% below their TGE prices, even though they offer robust infrastructure and genuine utility.
- ### DeFi Enters the Dynamic DeFi Era
DeFi has long established its position as a core pillar of cryptocurrency, with the total locked value (TVL) of DEXs, lending platforms, yield products, and stablecoins exceeding $130 billion.
DeFi is built on programmable smart contracts, featuring verifiability, auditability, and high composability—today's top protocols are among the most battle-tested systems in the cryptocurrency space. However, despite DeFi's success, its underlying infrastructure has remained largely unchanged over the past five years. Key mechanisms such as concentrated liquidity provision or lending models have not seen significant changes.
Now imagine a new wave of adaptive DeFi systems—these protocols can automatically leverage or deleverage, rebalance LP positions, or enter/exit markets based on predicted price trends of underlying assets.
This marks the beginning of the dynamic DeFi era driven by AI and machine learning.
Machine Learning Enhanced Decentralized Finance
@AlloraNetwork is a major driver, collaborating with top DeFi protocols to bring machine learning-driven intelligence into traditional DeFi systems:
Machine learning-driven centralized LP strategies
Adaptive leverage/de-leverage LP management
Dynamic yield optimization based on forward risk signals
Predictions and signals are generated by the Allora reasoning network, with AI/ML engineers contributing models and earning token rewards based on Darwinian incentive mechanisms.
AI-Managed DeFi Strategies
AI-managed/created DeFi strategies from teams like @gizatechxyz and @almanac are on the rise.
Giza acts as an AI capital allocator, managing user funds through a curated selection of DeFi protocols and strategies.
Almanak enables AI agents to design and deploy tokenized DeFi vaults in minutes, customizing them according to user-specified strategies. This allows Almanak to serve both as a capital allocator (bringing TVL into DeFi projects) and as a vault creation platform for fund managers.
As traditional finance merges with decentralized finance, machine learning systems enhance the core values and risk management of decentralized finance, with AI curators designing increasingly complex strategies. We may see decentralized finance expand at a faster pace in 2026, unlocking a smarter, more autonomous, and adaptive financial layer for the internet economy.
What’s Next?
In 2026, we may witness more integration between different narratives—cryptocurrency, artificial intelligence, DeFi, RWA, DePIN, and robotics are converging into an interoperable digital economy run by humans and agents.
DeFi becomes vibrant
AI drives the scaling of DeFi, with user numbers growing by millions.
Cryptocurrency rail transport, stablecoins, and breakthrough use cases reach millions of new users.
New digital banks (Neobanks) connect Web2 and Web3 users, merging the two worlds.
The scale of prediction markets continues to expand, with machine learning teams becoming one of the core pillars of product management.
The process of natural selection operates faster, with only a few crypto assets seeing price increases.
Cryptocurrency projects may opt for IPOs instead of ICOs, leveraging traditional financial capital markets to gain liquidity, legitimacy, and scale.
The next cycle = a cycle of integration between traditional finance and decentralized finance.
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