In-depth exploration of the six major behind-the-scenes trends shaping the cryptocurrency industry, revealing potential changes in 2026.
Author: 0xJeff
Translation: Deep Tide TechFlow
2025 is a challenging year—despite the U.S. President's promise to make the U.S. a global center for cryptocurrency and artificial intelligence, the cryptocurrency industry has faced a tough year.
Since Trump took office in January, the crypto space has experienced a series of tense moments, particularly the flash crash in October that paralyzed the entire industry.
Although the ripple effects of the flash crash have not fully dissipated, the macroeconomic backdrop and favorable industry factors have brought a positive quarter and optimistic outlook for 2026.
In this article, we will delve into the six major behind-the-scenes trends shaping the cryptocurrency industry, revealing potential changes in 2026.
Let's start exploring ↓
1. Prediction Markets = Product-Market Fit for Crypto Options
The prediction market (PM) industry recently set a new historical weekly trading volume record, surpassing $3 billion for the first time two weeks ago.
We are witnessing a rapid expansion of prediction market types—covering a wide range from politics, sports, esports, pop culture, trending mention markets, to macroeconomics, cryptocurrencies, finance, corporate earnings, technology, and more.
Currently, platforms like @Polymarket and @Kalshi position themselves as general prediction markets, covering all exciting fields. Meanwhile, some emerging prediction markets, such as @trylimitless and @opinionlabsxyz, focus on more niche areas: Opinion focuses on macroeconomics, providing interest rate markets for the U.S., EU, and Japan; Limitless focuses on the cryptocurrency market, covering a broader range of crypto assets over different time frames.
Crypto options were very popular during the last bull market in 2021, but their popularity has significantly declined due to various challenges. The main issues include inadequate user interface/user experience (UI/UX) and a lack of liquidity.
Prediction markets address these shortcomings of options—they provide an intuitive and user-friendly interface that allows anyone to easily place bets without needing financial knowledge; at the same time, they effectively guide capital inflow by creating engaging markets, where anyone can become a market maker or participant (betting "yes" or "no"). Instead of struggling to understand Greek letters and complex terminology in options, it's simpler to just buy "yes" or "no" shares.
Similar to options, people also use prediction markets as a tool to hedge risks on core assets. For example:
Have a lot of airdrop tokens but want to hedge risk? You can buy "no" shares in the relevant market.
Is your portfolio too heavily weighted in long positions? You can buy "no" shares in the macroeconomic or Bitcoin market.
Got it?
Prediction markets essentially repackage options into a product that is more accessible to the general public—a platform that anyone can participate in and benefit from. One of the main beneficiaries is the machine learning/prediction teams.
- Prediction Markets: The Perfect Testing Ground for Machine Learning Teams -----------------
Teams like @sportstensor, @SynthdataCo, @sire_agent, and @AskBillyBets are working hard to optimize their signal performance in prediction markets.
Sportstensor acts as a liquidity provision layer on the Polymarket platform, allowing any prediction market trader to participate in prediction competitions and contribute signals. The best-performing signals will receive Alpha Token rewards, and these top signals will also be used to further optimize Sportstensor's prediction models for future commercialization.
Synth positions itself as a high-frequency trading (HFT) prediction market hedge fund, using its predictive signals to forecast price changes in crypto assets within 1 hour and 24 hours, and placing bets in prediction markets. Preliminary data shows a 500% return over one month ($3000 -> $15000).
Sire is building an Alpha Vault, betting in sports markets using the Sire model driven by SN44 Score data, with preliminary results showing returns exceeding 600%. This is currently the most outstanding prediction market DeFi vault product on the market and is set to launch publicly soon.
Billy provides analysis and automated betting features based on Billy's sports betting insights (BCS). The team is exploring liquidity advantages for betting on Parlays types on the Kalshi platform and plans to expand this strategy to scale the vault (future profits will be returned to token holders once the vault reaches scale).
The allure of prediction markets lies in their provision of an arena for various AI models resembling "Darwinian competition," where machine learning teams can participate and validate their strategies in a real environment.
Synth, Sire, and Billy can all compete in Sportstensor's competitions and may join the "Market Battle" initiated by @aion5100 and @futuredotfun, which will take place on Polymarket and Kalshi.
Even cooler, Polymarket is previewing the launch of Poly Token, while emerging prediction markets are attracting liquidity and trading volume through token incentives. Machine learning teams can not only discover pricing errors and arbitrage opportunities but also "mine" to earn token rewards.
Does this remind you of the early days of Hyperliquid?
History is repeating itself, but this time the protagonist is the prediction market, not perpetual contracts (Perps).
2. The Battle of New Digital Banks (Neobanks) Begins
We are witnessing a transformation: mainstream Web2 startups and large enterprises are beginning to launch their own L1/L2 blockchains and integrate stablecoin payment rails to provide services directly to users. At the same time, crypto-native projects are also penetrating the realm of real-world financial services.
Teams like @etherfi, @useTria, @AviciMoney, and @URglobal have launched non-custodial crypto payment cards, allowing users to make offline payments directly using their crypto asset balances.
In just one year, this market has transformed from a blue ocean into a fiercely competitive battleground, with over 20 to 30 heavyweight players vying for the same batch of crypto users.
Current Differentiation Competitive Points:
Cashback/Rebate Rates
- Tria excels in this area, offering the highest rebate rates but requires an annual subscription fee.
Foreign Exchange, Transfer, and ATM Fees
- Platforms are fiercely competing on these fees.
Additional Benefits
- Including travel, hotel membership levels, airport lounges, and event tickets.
Yield/DeFi Integration
- Offering yield features for idle funds, lending payment functions, etc. EtherFi stands out in this area, providing high yields and lending payment features.
Despite this, the underlying structure of most such products remains the same. They rely on partner banks/issuers holding Visa/Mastercard licenses, positioning payment cards as a front-end user acquisition tool rather than a true digital bank (Neobank).
For the following reasons, most crypto payment card projects currently have limitations:
Compliance is controlled by the issuer/bank partner, not autonomously managed by the project team
User balances are virtual accounts, not full bank accounts
Most services are limited to "crypto payments," lacking fiat withdrawal or complete banking functions
Currently, this model is still accepted by the market, as all projects operate under similar constraints. However, as competition intensifies, projects capable of becoming true banks may gain a decisive advantage.
Those that can control their own compliance and regulatory systems will be able to offer more comprehensive services, including providing real bank accounts, supporting fiat deposits/withdrawals in multiple currencies, and seamlessly integrating crypto and traditional financial payment rails.
In this regard, UR (from the Mantle ecosystem) is already leading the way. It currently operates under the supervision of the Swiss Financial Market Supervisory Authority (FINMA), holding a Swiss banking license, supporting seven fiat currencies, and bridging real-world and crypto financial services. Users can not only freely switch between crypto assets and fiat but also transfer funds between seven currencies through traditional banking channels.
3. The Hottest Applications and Use Cases in the Crypto Industry Are Becoming Clearer
Trading
Predicting
DeFi Yield Farming
Stablecoins
Asset Tokenization
We have experienced the evolution from centralized exchanges (CEX) to spot decentralized exchanges (Spot DEX), and then to perpetual contract decentralized exchanges (Perp DEX), with Hyperliquid now standing out in this field.
The ultra-speculative model of the launch platform (Launchpad) pioneered by Pumpdotfun has led to a wave of launch platform trends targeting various narratives.
Prediction markets have achieved "escape velocity," truly reaching mainstream audiences for the first time. This phenomenon of widespread adoption has not been seen since the NFT craze (when people were still mocking those "ugly JPEGs"). But this time, user attitudes have changed—they really like prediction markets.
DeFi is gradually expanding to Wall Street through structured yield products, interest products, stablecoins, real-world assets (RWA)/decentralized physical infrastructure networks (DePIN), and asset tokenization. People are beginning to realize that they can not only own a piece of the future but also earn yields from these assets, even using them as collateral for loans.
All key crypto use cases are being amplified, and centralized exchanges (CEX) are starting to roll out features similar to super wallet applications. Platforms like Base App, Binance, and OKX are expanding their wallet capabilities, making it easier for ordinary users to get started. Meanwhile, ICOs (Initial Coin Offerings) are making a comeback—Coinbase has launched the first Monad ICO, and other launch platforms like Legion and Kaito are gradually gaining more user favor.
4. Crypto AI Finds Initial Product-Market Fit (PMF)
The early development of crypto AI was filled with projects that were merely riding the hype—some AI concept coins and GPT shell products claiming to be "AI agents" emerged, but those days are over.
Now, blockchain payment rails and stablecoins are driving commercial transactions between agents. At the same time, cryptographic technologies like Trusted Execution Environments (TEE) and zero-knowledge proofs (zk proofs), combined with token economic mechanisms (incentives and penalties), are making AI systems verifiable and deterministic.
A supportive tech stack (such as x402, ERC-8004, programmable wallets, metering/billing frameworks, verifiable reasoning/computation, and other extended functionalities) is laying the groundwork for trustworthy, continuous, and secure AI-human collaboration. This infrastructure aims to enable seamless transactions and collaborations between AI and humans anytime and anywhere while setting up protective mechanisms to prevent AI from experiencing "hallucinations" or going out of control.
Meanwhile, Darwinian AI is emerging as a compelling meta-layer model, evolving AI/intelligent agents through gamified competition to enhance signal quality and improve performance through real-world incentive mechanisms. Currently, the most successful applications are primarily focused on trading and predictive signals, which align closely with the core DNA of the crypto industry.
An increasing number of ecosystems are adopting this Darwinian model, using token incentives to attract developers, reward contributors, and subsidize the development of high-quality AI products. Although this field is still in its early stages, the Bittensor ecosystem has shown promising development momentum, with its top subnet performing particularly well.
However, despite these technological advancements and demonstrated product-market fit, the tokens of most crypto AI projects have not kept pace, with current trading prices generally 30% to 90% lower than their TGE (Token Generation Event) prices, even though they have delivered robust infrastructure and practical utility.
5. DeFi Enters the "Dynamic DeFi Era"
DeFi has firmly established itself as a core pillar of the crypto industry, with the total value locked (TVL) in decentralized exchanges (DEX), lending platforms, yield products, and stablecoins exceeding $130 billion.
Built on programmable smart contracts, DeFi offers verifiability, auditability, and high composability. Today's top protocols are among the most resilient systems in the crypto space. However, despite DeFi's tremendous success, its underlying infrastructure has seen little significant change over the past five years. Some key mechanisms (such as concentrated liquidity provision and lending models) have not undergone substantial evolution.
Now, imagine a wave of new adaptive DeFi systems—these protocols can automatically leverage or deleverage, rebalance liquidity provision (LP) positions, or automatically enter or exit based on the predicted price trends of underlying assets.
This marks the arrival of the Dynamic DeFi Era, driven by artificial intelligence (AI) and machine learning (ML).
Machine Learning-Enhanced DeFi
@AlloraNetwork is a major player in this field, collaborating with top DeFi protocols to introduce 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-looking risk signals
Predictions and signals are generated by the Allora inference network, where AI/ML engineers earn token incentives by contributing models. This incentive mechanism follows a Darwinian AI incentive design, rewarding better-performing models.
AI-Managed DeFi Strategies
We are also seeing @gizatechxyz and @almanak launch AI-managed and AI-created DeFi strategies:
Giza acts as an AI capital allocator, managing user funds across selected DeFi protocols and strategies.
Almanak allows AI agents to design and deploy tokenized DeFi vaults in minutes, tailored to user-specified strategies. This makes Almanak both a capital allocator (bringing total value locked TVL to DeFi projects) and a vault creation platform for fund managers.
As traditional finance and DeFi further converge, machine learning systems continuously enhance DeFi's core value and risk management capabilities. AI strategy curators are designing increasingly complex strategies, and we may see DeFi expand at a faster pace by 2026. This will unlock a more intelligent, autonomous, and adaptive financial layer for the internet economy.
Future Outlook
By 2026, we may see further integration between different narratives—cryptocurrency (Crypto), artificial intelligence (AI), decentralized finance (DeFi), real-world assets (RWA), decentralized physical infrastructure networks (DePIN), and robotics are merging into an interoperable digital economy run by humans and intelligent agents.
DeFi becomes more dynamic
AI helps DeFi expand to millions of new users
Crypto payment networks, stablecoins, and breakthrough use cases will reach more users
New digital banks (Neobanks) connect Web2 and Web3 users, merging the two worlds
The scale of prediction markets expands, with machine learning teams becoming one of the core pillars of prediction markets
Natural selection accelerates, with only a few crypto assets appreciating in value. Crypto projects may lean more towards IPOs (Initial Public Offerings) rather than ICOs (Initial Coin Offerings), seeking liquidity, legitimacy, and scaling support through traditional financial (TradFi) capital markets.
The next cycle = a period of deep integration between traditional finance (TradFi) and decentralized finance (DeFi).
Disclaimer
This article is for informational and entertainment purposes only. The views expressed herein do not constitute investment advice or recommendations. Readers should conduct their own due diligence based on their financial situation, investment goals, and risk tolerance (which this article does not consider) before investing. This article does not constitute an offer or invitation to buy or sell any assets mentioned.
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