21Shares Cuts 2026 Crypto Forecasts as Bitcoin Cycle Holds and DeFi Hacks Rise

TLDR

• 21Shares said Bitcoin’s four-year cycle has not broken yet.
• Bitcoin peaked near $126,000 in October 2025 before falling.
• 21Shares now sees Bitcoin recovering toward $100,000 by year-end.
• Prediction markets recorded $57.5B in volume through May.
• DeFi TVL stayed near $140B after more than $840M in 2026 exploit losses.

21Shares has revised several of its 2026 crypto market expectations in a midyear update, saying the digital asset economy has continued to mature while weaker prices and security failures have delayed some of the firm’s earlier targets.

The asset manager said its broad forecast for 2026 remains tied to a shift from market narratives toward fundamentals, including regulated exchange-traded products, stablecoin adoption, tokenized assets, and new onchain applications. However, the firm said the first half of the year produced a more mixed picture than expected.

Bitcoin remains central to that reassessment. 21Shares said it had expected Bitcoin’s four-year cycle to weaken, but price action has continued to resemble prior post-halving patterns after BTC peaked near $126,000 in October 2025 and later entered a sharp decline.

Bitcoin Cycle Remains Intact Despite Institutional Ownership

21Shares said Bitcoin’s market structure has changed, with exchange-traded funds and other investment products increasing institutional ownership. The firm noted that the current drawdown, at about 50%, remains milder than the 80% or deeper bear markets seen in previous cycles.

The report also said Bitcoin has not fallen below its aggregate cost basis of about $54,000, which suggests the market has so far avoided the full capitulation seen in earlier downturns. Even so, 21Shares said the four-year Bitcoin cycle has not fully broken because investors continue to weigh BTC against equities, commodities, AI-linked assets, and other competing opportunities.

The firm’s base case now points to a year-end Bitcoin recovery toward $100,000 rather than a new all-time high. The outlook reflects continued wallet growth and institutional participation, while acknowledging that price trends still follow a familiar post-halving pattern.

Crypto exchange-traded product assets have also missed earlier expectations. 21Shares had projected global crypto ETP assets under management could exceed $400 billion, but the firm said total assets stood near $140 billion by the end of May, down around 15% year-to-date.

ETP Holdings Stay Near Highs as Stablecoins Grow

Despite lower asset values, 21Shares said crypto investment product adoption remains resilient. U.S. spot Bitcoin ETFs have recorded about $3 billion in net outflows this year, but their BTC holdings remain above 1.25 million BTC, close to record levels.

The report said this shows many investors have held positions through volatility rather than exiting entirely. New product launches have also continued after changes to SEC listing standards opened the door for more crypto products beyond Bitcoin and Ethereum.

Stablecoins were another area where growth remained strong but below the firm’s earlier forecast. 21Shares previously expected stablecoin supply to reach $1 trillion by year-end, but now sees a more realistic range of $400 billion to $600 billion.

The firm said total stablecoin supply stood near $320 billion at the end of May. It cited the GENIUS Act in the United States and MiCA implementation in the European Union as regulatory steps that have supported the sector, while the CLARITY Act debate around yield-bearing stablecoins slowed part of the market’s growth path.

Prediction Markets Lead While DeFi Falls Short

Prediction markets are one of the few sectors tracking ahead of 21Shares’ earlier forecast. The report said prediction markets recorded $57.5 billion in trading volume through the end of May, putting the sector on course to exceed the firm’s $100 billion annual target.

The firm said major events in the second half of the year, including the FIFA World Cup and U.S. midterm elections, could lift activity further. It also cited regulatory progress, platform integrations, and growth in event-based trading as factors supporting the sector.

Decentralized finance has moved in the opposite direction. 21Shares had expected DeFi total value locked to exceed $300 billion in 2026, but TVL stood near $140 billion after a year marked by more than $840 million in losses across over 50 exploits.

The firm said major hacks have kept capital sidelined, including the KelpDAO exploit and bridge-related security failures. However, it noted that selected protocols with revenue and active users, including Hyperliquid and Morpho, continued to attract capital.

Digital asset treasury companies also remain below 21Shares’ $250 billion target. Public companies hold nearly 1.28 million BTC, but the value of corporate crypto treasuries is near $100 billion at current prices. The firm said several treasury vehicles now trade below the value of their crypto holdings, creating conditions for consolidation.

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