Key Highlights
- 21Shares says crypto’s shift from speculation to fundamentals remains on track despite slower-than-expected progress in some sectors.
- Prediction markets have emerged as one of 2026’s strongest performers, with volume already exceeding $57 billion by May.
- Stablecoin supply continues to reach record highs as regulatory clarity improves through MiCA and the GENIUS Act.
Crypto asset manager 21Shares has released its mid-year “State of Crypto” report, revisiting a series of forecasts it made at the beginning of 2026 and assessing how the industry has performed through the first six months of the year.
In a report published today, the firm stated that crypto’s long-term transformation from a narrative-driven market into a fundamentals-driven asset class remains underway, though several key trends have progressed more slowly than expected.
According to 21Shares, stablecoins, prediction markets, tokenization, and institutional infrastructure continue to show strong growth, while Bitcoin, DeFi, and digital asset treasury companies have struggled amid broader market weakness.
Bitcoin’s cycle is changing, but not broken
One of the firm’s major predictions was that Bitcoin’s traditional four-year market cycle would finally break. While market structure has evolved significantly due to ETF adoption and institutional participation, 21Shares acknowledged that Bitcoin’s price behavior continues to resemble previous post-halving cycles.
After reaching approximately $126,000 in October 2025, Bitcoin experienced a significant correction, though the decline has remained substantially smaller than the 80% drawdowns seen during previous bear markets.
“Stronger foundations do not make Bitcoin a cycle-neutral asset,” the report stated, noting that Bitcoin’s adoption metrics continue improving despite price volatility.
The firm now expects Bitcoin to recover toward $100,000 by year-end rather than reach new all-time highs.
Stablecoins continue growing as regulation advances
The report also reviewed its forecast that stablecoin supply would surpass $1 trillion during 2026.
While that target now appears unlikely, 21Shares highlighted regulatory progress, including the passage of the GENIUS Act in the United States and full implementation of MiCA regulations across the European Union.
Stablecoin supply currently stands near $314 billion, with the firm projecting a more realistic year-end range between $400 billion and $600 billion.
Importantly, 21Shares noted that stablecoin supply continues to reach record highs despite broader crypto market weakness.
“That is the strongest evidence yet that stablecoins are one of crypto’s defining use cases,” the report said.
Prediction markets emerge as a leading sector
Prediction markets emerged as one of the strongest-performing sectors in the report.
21Shares originally forecast that annual trading volume would exceed $100 billion in 2026. By the end of May alone, prediction markets had already generated roughly $57.5 billion in trading activity. The firm now expects the sector to comfortably surpass its original target, potentially reaching $200 billion by year-end.
The report cited regulatory clarity, growing integrations with major technology platforms, and increasing political and macroeconomic uncertainty as key drivers behind the industry’s rapid expansion.
DeFi growth slowed by record hacks
Not all sectors met expectations. 21Shares predicted decentralized finance would surpass $300 billion in total value locked during 2026, but DeFi currently sits closer to $140 billion.
A major factor behind the slowdown has been a surge in security incidents. According to the report, more than $840 million has been lost across over 50 exploits this year, making 2026 one of the worst years for DeFi security on record.
The firm specifically highlighted the KelpDAO exploit, which triggered billions of dollars in capital withdrawals and damaged confidence in several segments of the ecosystem.
Despite these setbacks, the report notes that protocols generating real revenue continue attracting significant capital.
Tokenization gains momentum on Wall Street
Tokenized real-world assets remain one of the strongest structural growth themes. Public blockchain-based tokenized assets currently exceed $30 billion, while tokenized assets represented on institutional networks are estimated at nearly $350 billion.
The report highlighted several major developments, including DTCC’s plans to tokenize U.S. Treasury securities and Nasdaq’s growing involvement in tokenized equity infrastructure.
While 21Shares acknowledges its original $500 billion target may be difficult to achieve this year, it argues that traditional financial institutions are now laying the groundwork for a much larger transition toward onchain markets.
Overall, 21Shares maintains that the long-term thesis behind crypto remains intact.
The firm argues that regulatory clarity, stablecoin adoption, tokenization, prediction markets, and emerging AI-powered blockchain applications continue pushing the industry toward broader mainstream adoption.
While several forecasts have fallen behind schedule, the report concludes that crypto’s evolution into a mature financial ecosystem is progressing steadily, with many of the strongest trends now being driven by fundamentals rather than speculation.
Also read: Binance Founder CZ Surpasses Bill Gates on Forbes Billionaires List
