Original Author: Ignas | DeFi Research
Original Translation: Deep Tide TechFlow
Introduction: DeFi researcher Ignas continues last year's "Truths and Lies" series, analyzing the 2026 crypto market through Peter Thiel's framework.
Core Argument: The U.S. stock market bubble has hijacked crypto assets, BTC is completing its narrative shift from a risk asset to a safe-haven asset, and the four-year cycle may have already failed. The article covers multiple main lines including RWA, privacy, regulation, and DAT, with a high density of information.
The main text is as follows:
The U.S. stock market is in a "bubble" phase, with valuation levels comparable to the peak of the 1999 internet bubble.
Caption: Source Gemini, data for reference only
The current price-to-earnings ratio has reached 40.5 times, higher than the 32 times before the great crash of 1929.
Warren Buffett's "best single measure of valuation" — the ratio of total market capitalization to GDP — is now 230%, 77% above the long-term trend. This ratio was 130% before the 1929 crash.
Caption: Source link
Of course, this time might be different. You could say this is a "currency devaluation trade" — the dollar's purchasing power is declining, and the world needs to digest debt through inflation.
But the statement "currency devaluation trade is real" might be a "non-obvious lie."
If that were the case, the line in the chart below should be flat.
If the money supply doubles → stocks double → the ratio remains unchanged.
But in reality, this line is vertically upward.
This indicates that stock prices are rising 28 times faster than the rate of money creation.
Or perhaps AI is indeed transformative, and traditional indicators no longer apply.
Coupled with macro uncertainty, inflation, and escalating wars, people naturally become worried.
As Ollie wrote, people live in "general economic anxiety."
"You don't need to be a prophet to know that for most people, the desire of this era is stability, ownership, and exposure to upside. We are still children of capitalism, and our desires are inherently capitalist."
"So for most people, the clearest answer is to hold stocks and equities, and then foreseeably endure 12 more months of Trump waving his fists and boasting about his genius."
Naturally, fewer people are now willing to bet 100% of their positions on altcoins.
But the outlook for BTC may be different.
I view BTC as a safe-haven asset: hedging against macro uncertainty, the collapse of international order, and fiat currency devaluation (even though devaluation may not have occurred).
This is a "non-obvious truth" I shared in my blog last year.
Too many people still regard BTC as a risk asset, believing it will only rise in times of macro stability and soaring NASDAQ.
It is this narrative conflict that suppresses prices. Fearful holders need to surrender to buyers who see BTC as digital gold.
I hope the "great rotation" can be completed this year, solidifying BTC's status as a safe-haven asset.
But there is a huge risk: the stock market could plunge along with all assets… and crypto would follow suit.
Therefore, considering this macro bubble context, I want to focus on the mid-term trends that I believe will shape the crypto market in 2026.
There is no better entry point than distilling the truths and lies of 2026.
First, crypto is a prisoner of this macro bubble.
As last year, I continue to use the framework originally proposed by Peter Thiel, later adapted for the crypto space by Matti from Zee Prime Capital.
"If you listen to the current discussions and narratives, what do you think are the obvious truths, and what are the obvious lies? What are the non-obvious truths, and what are the non-obvious lies?" — Matti
Non-obvious truths and lies are harder to discover, but they reveal what will soon be clear to everyone. These are the best trading opportunities.
This is a challenge. I dare you to come up with your own non-obvious truth/lie. I bet it's harder than you think. As Matti wrote:
"If your insights are only in the obvious realm — you may not have anything unique to offer, just competing with many others."
Obvious Truths and Lies
Lie: Retail investors will come back to buy in
CT seems to still be waiting for "newbies" to return.
But retail investors have been battered, and in the current macro environment, they are more worried than ever. They have been harvested by ICOs (2017), NFTs (2021), and Memecoins (2024) in succession. Each wave of trends has been a value extraction, with retail acting as exit liquidity.
Therefore, the next wave of funds is likely to come from institutions.
This is the view of Zach from Chainlink, which I find quite reasonable.
Unlike retail, institutions do not buy air coins. They do not buy "governance rights" from protocols with zero revenue.
They will buy tokens with "dividend-like" properties (fee switches, real earnings), projects with clear PMF (stablecoin issuers, prediction markets), and targets with clear regulation.
In fact, Tiger Research predicts that "utility-driven token economics have failed. Governance voting rights have not attracted investors." They predict that projects unable to generate sustainable revenue will exit the industry.
But I have a concern for 2026.
If tokens cannot provide this value, institutions will bypass tokens and directly purchase equity in development companies (just like Coinbase acquiring the Axelar team but not the tokens).
We have already seen conflicts of interest between token holders and equity holders (Aave Labs vs DAO).
If we do not resolve this issue, ultimately smart money will hold equity (real value), while retail will hold tokens (exit liquidity).
For crypto to succeed, value must flow to tokens, not Labs companies. Otherwise, we are just rebuilding the same traditional financial system.
This will be a major issue to watch closely in the coming year.
Truth: Quantum risk is real
There are two layers of risk here:
- The real risk of quantum computers "cracking blockchains" or wallets relying on non-quantum-resistant technology
- The perceived risk that investors believe quantum risk is real
Because 1) very few truly understand quantum technology, and 2) the crypto market is dominated by narratives, emotions, and momentum, which makes crypto susceptible to FUD attacks.
What I mean is that until these risks are fully resolved, quantum risk will continue to suppress crypto prices.
We do not need quantum computers to actually empty Satoshi's wallet to see BTC plummet by 50%. We only need Google or IBM to issue a news headline about a "quantum breakthrough" to trigger widespread panic.
In this scenario, I foresee a potential rotation towards quantum-resistant chains, especially Ethereum.
- Ethereum is already preparing for quantum resistance in its roadmap (The Splurge). Vitalik has also clearly expressed this need.
- Bitcoin may erupt into a civil war due to a hard fork upgrade of the signature algorithm (from ECDSA to a quantum-resistant scheme).
- New L1s may launch with "post-quantum cryptography" (PQC) as a main selling point (don't be fooled).
But if BTC fails to prepare and erupts into civil war, it will drag down all crypto assets, as market makers, hedge funds, etc., will rebalance their portfolios.
Truth: Prediction markets are just getting started
There are few opportunities in the crypto space as obvious as prediction markets.
This view comes from Andy Hall, a research advisor at a16z crypto, and is too accurate to ignore.
Prediction markets will enter the mainstream by 2024. But by 2026, they will become larger, broader, and smarter.
Andy says prediction markets are moving beyond questions like "who will win the U.S. election" to super-specific outcomes.
- More contracts: Real-time odds for everything. Geopolitics, supply chains, and maybe even "Will Ignas issue a token?"
- AI integration: AI agents will scan the internet for signals to trade these markets, making them more efficient than any human analyst.
The biggest trading opportunity is: who gets to decide the truth? As the market scales, adjudicating bets becomes an issue. We saw this with the Venezuela invasion (?) and the Zelensky market. Existing solutions (UMA) failed to capture nuances, leading to disputes and "scam" accusations.
Thus, we need decentralized truth. Andy predicts a shift towards decentralized governance and LLM (AI) oracles to resolve disputes.
Perhaps the POLY token will play a role in this? Where are your trading opportunities?
Lie: Airdrops are dead
I must add this point.
Airdrops have been, and still are, the easiest way to make money in the crypto space. Many people believe airdrops are dead because 1) it’s harder to obtain large rewards, and 2) witch detection has improved.
But if you are a real user, trying new applications every day and using them, I believe the returns are worth it.
The Neofinance airdrop is expected to start in 2025, but the real money printing opportunities are with Polymarket, Base, Opensea, Metamask…
If CT thinks airdrops are dead, that’s even better. Fewer farmers, less competition.
Lie: Memecoins are finished
To be honest, I don’t like memecoins. But sometimes I still trade them.
Winning money on memecoins is intellectually interesting 😉, as you can perceive where the sentiment will shift. The volatility is exciting, and you don’t need to study token economics, revenue streams, etc., which is the appeal of memecoins.
Institutional-grade L1s, revenue-sharing, or governance tokens can’t provide that kind of thrill. A four-year unlock is boring. In terms of revenue, utility tokens are even less attractive than memecoins that rely purely on sentiment.
Moreover, financial nihilism won’t disappear on January 1st. Regulations won’t ban them either.
When the crypto market turns bullish, memecoins will reappear. The incentives for KOLs to shout out trades are too high. Retail investors are too eager for 1000x victories.
If degen trading is your thing, keep an open mind (and wallet).
Truth: Tokenization/RWA will dominate crypto growth
In 2025, few charts will show a consistent upward trend.
But the growth of RWA and tokenized assets is one of them.
RWA is very different from cyclical DeFi, NFTs, prediction markets, or perpetual contracts. RWA is not speculative hype. It’s a long-term shift driven by institutional capital finding product-market fit.
Their predictions for 2030 vary widely:
- McKinsey (conservative): $2-4 trillion
- Citi: $4-5 trillion
- BCG + ADDX: $16 trillion
- Ripple + BCG: $18.9 trillion by 2033
- Standard Chartered (optimistic): $30 trillion
Optimistic forecasts suggest that RWA will exceed the total market capitalization of the entire crypto industry (currently $3.3 trillion).
BlackRock and Larry Fink are vigorously promoting RWA. In his 2025 annual letter, he compared the current moment to "the internet in 1996" — when Amazon was still a bookstore and Google had not yet been founded.
Caption: Source Economist (free reading link)
His argument:
"Every stock, every bond, every fund — every type of asset — can be tokenized. If realized, it will fundamentally change investing."
The benefits of RWA are obvious to crypto natives, but traditional finance is still learning. We are still early:
- Collateral availability
- DeFi composability
- 24/7 settlement
- Programmable compliance
As crypto natives, how can we profit from this growth?
Here are a few trading opportunities:
- LINK: Huge market share in the oracle space. UBS, Swift, and DTCC have all integrated Chainlink for tokenized pricing. If RWA scales, LINK will occupy the data layer.
- PENDLE: Can they attract institutional capital? Allowing degen speculation on yields while providing fixed income for long-term holders. Worth watching.
- Lending platforms: Fluid, Aave, Morpho, Euler… Will institutions use these DeFi platforms? Will retail? Key questions.
- RWA issuers: Ondo, Backed finance, Securitize, etc., are gateways for RWA issuers and retail to enter RWA.
- ETH: 65-70% of on-chain RWA value is on Ethereum. BlackRock, Franklin Templeton, and JPMorgan are all on Ethereum. Institutional settlement layer. This is why Ethereum must provide institutional-grade privacy, or new L1s may erode ETH's market cap.
- Stablecoin yield arbitrage: Borrowing at 4-6% on Aave, depositing into Pendle's PT-USD-like tokens to earn 8-12%.
You can also add Maple finance for private credit exposure, and Centrifuge (though I lost on that). What else am I missing?
This will be the main trading line for 2026 (and beyond).
Tiger Research predicts "Enterprises may build their own chains to maintain market leadership. RWA projects lacking independent asset supply will lose competitive advantage and be eliminated."
If you focus on just one thing, pay attention to where new RWA assets are issued: on Ethereum, Solana, or some new L1s where you have no exposure.
Non-obvious truth: Ethereum L1 is scaling (directly)
Most people think Ethereum L1 is still stuck in 2020: slow, expensive, and delivering all value to L2.
But Ethereum L1 is quietly scaling, and the market hasn’t priced it in yet.
When Vitalik says "the blockchain trilemma has been solved on Ethereum," it’s not his usual style.
@VitalikButerin tweeted:
"ZK-EVM is now in alpha (production-grade performance, remaining work is security), PeerDAS has gone live on the mainnet, and it’s time to talk more about what this combination means for Ethereum.
These are not small improvements; they are transforming Ethereum into…"
After last year's Fusaka upgrade, the gas limit reached 60 million (up from 30 million). By mid-2026, the gas limit could reach 80 million and then exceed 100 million.
With ZK-EVM, Ethereum L1 is pushing towards thousands of TPS while maintaining full decentralization.
"No longer does every validator re-execute every transaction, but a single proof verifies the entire batch, reducing computational demands. This allows developers to increase the number or complexity of transactions without excluding small participants. Buterin stated that these virtual machines have reached 'production-grade performance,' with 'security' being the remaining focus." — DLnews
More activity on L1 = higher fee burning = stronger deflationary pressure. The narrative of ultrasound money is not dead. Well, it may have been dead for a few years, but it could re-emerge in the future.
L2 will still dominate ultra-cheap things (perpetual DEX), but the narrative that "everything must migrate to L2 forever" will become outdated and look ugly.
Oh, the quantum resistance pushed by the Ethereum Foundation and Vitalik makes ETH an attractive bet, especially if Bitcoin core developers mess things up.
I consider this a non-obvious truth because the rollout is gradual, without a single hype moment.
Non-obvious lie: All regulatory clarity is a good thing
The CLARITY Act passed? Good news. The GENIUS Act implemented? Good news. Europe’s MiCA? Good news…?
When I read Coinbase's celebratory posts about regulation, I wonder if this is really good news for you and me?
Of course, it may be good for Coinbase, but it’s more complicated for the entire crypto industry.
First, the GENIUS Act explicitly prohibits interest-bearing stablecoins.
But I think this is actually good for DeFi.
When stablecoin issuers cannot directly pay yields, where do stablecoin holders go? To DeFi protocols like Aave to earn yields themselves.
DeFi lending will exceed $50 billion in TVL by 2025, with stablecoin annual yields of 4-14%. Crypto collateral lending grew 27% in Q2 2025, reaching $53 billion.
So the yield ban won’t kill yields; it just shifts them on-chain. Stablecoins flow into protocols, protocols generate fees, and tokens capture value from those fees. The entire DeFi ecosystem benefits.
So on this specific issue of stablecoins, regulation may actually accelerate DeFi adoption.
But I worry that regulation will further stifle crypto innovation. Our degen era is over.
In the EU, MiCA has already banned USDT on all major exchanges. I can’t trade with USDT anymore, which is really bad.
Apart from stablecoins, the compliance costs of MiCA are very expensive for startups: small companies face annual costs of €250,000 to €500,000, and since its implementation, over €540 million in fines have been issued. 75% of European crypto service providers face the risk of losing their registration due to compliance costs.
The result is market consolidation, favoring already established companies. Even if Coinbase does not support the current CLARITY Act, they will push for regulations that benefit themselves.
I saw this firsthand while working in South Korea: only four exchanges were allowed to have KRW deposits. They pushed for regulations, but only to eliminate competition.
The U.S. is not purely positive either (an article from The Block explains that DeFi platforms will need to share private information).
Banks are also lobbying to extend stablecoin restrictions to non-interest-bearing rewards. As of writing, it is uncertain whether this will accompany the passage of the CLARITY Act.
So don’t automatically believe the narrative that "regulation = good news." Some regulations are clearly beneficial, but others will restrict what made crypto great in the first place.
Throw the documents into Claude/Gemini and ask what that legislation means.
Non-obvious lie: Privacy is just a short-term narrative
CT is excited about the rise of Monero and Zcash. The narrative is "privacy coins are back."
My non-obvious truth: the real privacy opportunity lies in providing privacy infrastructure for institutions.
Privacy coins are banned everywhere:
- The DFSA in Dubai has just banned privacy tokens.
- The EU explicitly prohibits "crypto asset accounts that allow for transaction anonymization" and "accounts using anonymous-enhanced coins," effective July 2027. According to the EU crypto initiative, this regulation is the "final version."
- Japan and South Korea banned privacy coins years ago.
- Binance and Kraken have delisted privacy tokens (Monero).
If you are an EU citizen, depositing ZEC from a blocked address into a regulated CEX will cause issues with the source of funds proof report. I am currently doing a forensic report, so trust me.
If the funds are untraceable, the CEX cannot verify the source, and the user is stuck.
But institutions urgently need privacy
Look at the chart from Tiger Research: the U.S. stock market share has shifted from within exchanges (about 70% in 2010) to nearly a 50-50 split with off-exchange trading by 2025. Bloomberg reports that most U.S. stock trading now occurs "in the dark."
Caption: Source Tiger Research
Why? Because on-chain transparency exposes their trading plans.
It may not be the best example, but when James Wynn's leveraged position of 949 BTC along with the liquidation price is visible on-chain… perhaps his claims of being targeted by psychological warfare are not entirely unfounded :)
"Professional trading firms and institutions are reluctant to deploy complex strategies on public blockchains because every step they take may be seen, copied, or countered."
In this context, I see more and more people talking about Canton. With a market cap of $5.4 billion, it quietly sits at 33rd place.
DTCC announced that they will begin tokenizing U.S. Treasury securities on Canton starting in Q2 2026. DTCC handled $37 trillion in securities transactions in 2024.
Canton is the first open blockchain built specifically for institutional finance that supports privacy. Participants control which counterparties can see specific transaction information: unlike public chains, not everything is broadcast.
"Many blockchain architectures are developed for open, permissionless environments, where transaction data is widely visible. While this model has advantages in certain cases, it is inconsistent with the requirements of regulated financial markets. Institutions cannot publicly expose positions, counterparties, or liquidity changes."
Canton's supporters are all traditional financial giants: BlackRock, Blackstone, Nasdaq, S&P Global, Goldman Sachs, Citadel Securities, HSBC, BNP Paribas, Euroclear……
So yes, privacy is absolutely important.
If my ETH and SOL positions are heavy, I would be nervous facing alt L1 competition.
But Ethereum is also moving towards privacy.
First, Vitalik is clearly aware that privacy is one of the "known flaws" at the architectural level of Ethereum.
Vitalik Buterin shared a privacy roadmap that includes nine steps to improve L1 privacy: integrating privacy pools and tools like Railgun directly into wallets, making "one address per application" the default setting, and implementing TEE-based RPC privacy.
At EDCON 2025, the roadmap outlined by Vitalik includes:
"Efforts to read privacy include trusted execution environments, private information retrieval technologies, fake queries that obfuscate access patterns, and partial state nodes that only display necessary data. These measures aim to reduce information leakage at both ends of user interactions."
Ethereum needs to shift from "not doing harm" to "cannot do harm." Using cryptography to secure the system, even if individual participants are malicious.
Another redemption is L2: Aztec Network launched the Ignition Chain on Ethereum mainnet. The first fully decentralized privacy-preserving L2. Supported by $170 million from a16z and others, Aztec implements "programmable privacy," allowing users to control what is public and what is private.
Aztec co-founder Zac Williamson said:
"2025-2035 will be the era of privacy."
Non-obvious truth: The four-year cycle no longer applies
Oh my, I hope I'm not wrong on this point.
But I believe BTC and crypto have changed enough to escape the four-year cycle. This is precisely why crypto, especially BTC, has become a macro prisoner, and it is also the reason the previous pattern was broken.
This is one of the points in Messari's 2026 paper.
"As BTC is increasingly viewed as a macro asset, the importance of traditional frameworks like the four-year cycle is diminishing. BTC's performance will be shaped by broader macro forces."
We are now trading a different asset class.
- Miners are no longer important: Approximately 450 BTC (40.2 million USD) are issued daily. A 15-minute trading volume from a BlackRock ETF can absorb this. The supply shock narrative is dead because miners no longer control the circulation.
- ETFs have dampened volatility: This has already been mentioned in the "macro prisoner" section. Additionally, institutions and pension funds do not trade like retail investors; they have rebalancing obligations, which offset the previous cycles dominated by retail sell-offs.
- Liquidity is more important than halving: Overlaying charts with global M2 money supply matches very well. After the sell-off by BTC veterans and four-year cycle panic sellers, we briefly deviated from this relationship.
- BTC lags behind gold: Historically, gold leads Bitcoin by 60-150 days. While many expect Bitcoin to follow, I believe this catch-up trade and rotation into BTC will be stronger than the four-year cycle.
In the same Messari 2026 paper, they believe Bitcoin will remain strong by absorbing gold's monetary premium and store of value role.
Polymarket prices Bitcoin to outperform gold and the S&P 500 in 2026. But the gap is small.
So this is not an obvious truth.
Non-obvious truth: DAT is a net positive for crypto
G. Kendrick from Standard Chartered (Head of Crypto Research) lowered the 2026 Bitcoin target from $300,000 to $150,000 due to DAT depletion:
"…the Bitcoin Digital Asset Treasury (DAT) purchases may have ended, as valuations… no longer support further DAT expansion. We expect consolidation rather than a complete sell-off, but DAT purchases are unlikely to provide further support."
"Therefore, we now believe that future Bitcoin price increases are actually driven by only one leg," he added.
Grayscale's 2026 outlook report shares a similar view:
"Despite high media attention, we believe DAT will not be a major driver of volatility in the digital asset market in 2026."
"There will be a lot of discussion on these topics, but we believe they are not central to the market outlook."
DAT holds 3.7% of BTC supply, 4.6% of ETH, and 2.5% of SOL.
Demand has fallen from the peak in mid-2025: the largest DAT now trades at nearly 1.0 mNAV (see below).
Caption: Source Grayscale
However, most DATs are not over-leveraged (or not leveraged at all), so they may not be forced to liquidate assets during downturns.
The largest market cap DAT Strategy recently raised a dollar reserve fund, allowing it to continue paying preferred stock dividends even if Bitcoin prices fall.
Grayscale expects most DATs to trade at premiums and discounts like closed-end funds, with little asset liquidation. DATs may become a permanent feature of crypto, but they are unlikely to be a major source of new demand or significant sell pressure in 2026.
To be honest, DAT scares me. I would be happy if they become "non-news" in 2026.
But they are indeed important.
For ETH, DAT has already surpassed ETFs.
Unlike BTC DAT, ETH treasuries utilize their holdings. BitMine staked 74,880 ETH (219 million USD) to earn a 3% yield. SharpLink Gaming has earned 1,326 ETH (about 6 million USD) through staking rewards since June 2025.
BitMine is developing the "Made in America Validator Network" (MAVAN), aiming to earn $363-485 million in staking rewards annually by operating its own validators. They have also invested in MrBeast. This is quite confusing, but I like the experimentation.
BTC does not generate yield. But ETH DAT is transforming treasuries into productive infrastructure for validators, liquid staking, and DeFi yield farming.
This is another important reason I am bullish on $ETH in 2026. Quantum-resistant roadmap + L1 scaling + more sustainable DAT.
BTC, SOL, and ETH have ETFs competing with DATs.
But most altcoins are still too risky, too illiquid, or legally too complex to create ETFs.
This makes DATs the "IPO moment" for altcoins. It is a simple way for institutions to gain compliant exposure.
I believe these DATs can focus attention and determine which altcoins are worth buying.
Because there are thousands of altcoins, only a few can create DAT structures. This focuses user attention and capital inflow into a few assets that can be lifted.
But I worry about insider trading in DATs. Last year, the SEC and FINRA investigated over 200 DAT companies because stocks surged days before DAT announcements.
Additionally, retail investors dislike VCs exiting through DATs instead of selling in the spot market.
Overall, if:
- BTC's DAT becomes non-news in 2026
- ETH DAT continues to stake in PoS and DeFi protocols
- Altcoin DAT expands for high-quality assets
Then I believe DAT is a net positive for crypto in 2026.
But during downturns, DATs will exacerbate sell-offs. But this is nothing new; retail and institutions are both sellers.
Non-obvious lie: The return of ICOs fixes the token issuance model
ICOs are back.
- MegaETH raised $450 million with one of the most well-designed models.
- Echo was acquired by Coinbase for $375 million.
- Kraken partnered with Legion for "fair" sales.
- MetaDAO pioneered ownership token sales.
The narrative is beautiful: retail investors finally have the same access as VCs. Fair launches. Equal terms and democratized participation.
Indeed, the return to ICOs is necessary because low circulation and high FDV airdrops are unsustainable.
We do want to return to the early ETH ICO era for 450x returns.
Thus, ICO 2.0 platforms promise to address this issue. Legion uses "merit scores" based on on-chain, social, or development activity. Echo allows retail investors to invest "on equal terms with VCs."
I love it! Because my X account allows me to get the best deals, like the $50,000 allocation from the MegaETH sale.
But ICOs did not democratize token issuance:
- All require KYC (excluding most people in the world). As an EU citizen, I can't even buy Monad sales on COINBASE?!
- Reputation scores (favoring existing insiders and KOLs)
- Allocation caps that VCs do not have, or smart whales bypass through multiple wallets.
The token printing mechanism is always changing. From BTC forks (Litecoin), then ICOs became IDOs. IDOs turned into airdrops. Airdrops became points farming. Points became allocation scores.
But value always flows to those who 1) already control project flows and 2) know the rules of the game. I have written about this in previous posts.
The good side is that ICOs showcase the real demand for tokens. Because airdrop farming with inflated numbers obscures the true demand for tokens.
But if/when the market heats up, retail entry prices may be 10-50 times worse than seed investors, with unlocking plans releasing into sell pressure. On those projects where most of the upside has already been privately captured.
Once again, I love the ICO meta-narrative because I can get the best deals. But what about most of you?
Non-obvious truth: "All crypto card companies will eventually die"
This viewpoint comes from Pavel Paramonov:
He believes the main reasons crypto cards will die are:
- They run on Visa/Mastercard, so there is no real disruption.
- Easy to replicate: most are just brands on shared infrastructure (Rain raised $250 million at a $2 billion valuation).
- Centralized + KYC, which is contrary to the goals of crypto.
- Users will not tolerate extra fees/taxes in the long run.
- Once adopted, direct payments from wallets will replace them.
These are all good points, and I agree that most crypto card companies will shut down. Generally speaking, most startups fail, so it's easy to make this judgment :)
There is already evidence that stablecoins can enable direct P2P payments. The addition of USDC deposits by Interactive Brokers is a huge positive for crypto.
But I believe two types of "crypto card companies" will survive:
Those that offer crypto-collateralized lending, like Etherfi. Even CeFi platforms like Nexo, Bybit, and Crypto.com also offer cards, and that won't change.
More importantly, crypto card companies are becoming new banking applications, 1) providing banking services, and 2) building their own payment networks.
For example, Payy is building a privacy-first but regulatory-compliant payment L2. Their card is just the first use case of that network. If their network succeeds, their own success (achieving P2P transactions) will make the card obsolete.
Base has placed a big bet in this area by creating the Base application.
But the probability of this happening is low. Imagine replacing PayPal, Alipay, or other entrenched players in their fields.
What is more likely to happen is that Revolut will enable direct stablecoin payments, and then most crypto-native payment solutions… will die.
The fact is, crypto cards will still be a big business in the coming years because 1) banks are unwilling to accept deposits from crypto exchanges, and 2) using crypto cards to avoid taxes is a significant PMF.
But regulation will eventually catch up with crypto card companies or their users.
The success cases of stablecoins directly compete with crypto card companies. If stablecoin payments take off, cards will no longer be needed.
It is likely that current crypto card payments will evolve into new banks, trying to compete with new financial applications like Revolut. So yes, crypto cards that do not transform into new banks will die.
If they succeed, the upside potential is huge!
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