Fidelity's 2026 Outlook: Gold Leads in 2025, Bitcoin Takes the Lead in 2026

Author: Fidelity Digital Assets Research

Compiled by: Bilibili News

In 2026, the digital asset market is at a crossroads of maturity and transformation. This report, translated from Fidelity Digital Asset Research's "Look Ahead 2026," outlines the technological upgrades, governance evolution, institutional investment dynamics, and macroeconomic impacts of Bitcoin, Ethereum, and other mainstream tokens. The article not only reveals Bitcoin's resilience and maturity after experiencing multiple market shocks but also explores the evolution of token holder rights and its significance for future investment.

Stable Prices, Dramatic Change: How Digital Assets Are Reshaping the Industry — Chris Kuiper, CFA

introduction

In their 2025 Outlook, the Fidelity Digital Assets research team discussed a question that has troubled many investors: "Am I too late?"

This sentiment stems from the strong gains and acceleration of 2024. After a lackluster year-end performance, investors may now be wondering: "What exactly happened?"

2025 initially seemed poised for record-breaking performance, supported by strong fundamentals, unprecedented inflows into exchange-traded products (ETPs) and funds, a clearer regulatory environment, and a historically consistent bullish pattern, seemingly aligning with multiple new all-time highs. However, despite strong periods throughout the year, Bitcoin and the broader digital asset market were virtually flat by the end of 2025. As investors, we often use historical analogies to illuminate current paths. One analogy that recently came to mind for our research team was the story of container shipping.

In his book *The Box*, author Marc Levinson details a seemingly obvious cost-saving invention—the rectangular steel shipping container—that struggled for decades to achieve widespread adoption. While some have technically compared containers to blocks in a blockchain (each carrying information or data), the analogy may be deeper. Containers have dramatically reduced logistics costs and transit times, reshaping global trade and creating entirely new industries. They have reduced loading costs by 95% or more, shortened the time required to load a ship from a week to just a few hours, and required far less labor. Loading costs have also plummeted from over $5 per ton to mere cents.

However, it took the world decades to realize that containers were viable and reliable. This transformation required a major infrastructure overhaul: new cranes, trained operators, converted ships, railcars and trucks, and the relocation of ports and factories. This restructuring process took years, and most people didn't realize the transformation as it unfolded. The digital asset industry may be similarly in a "disillusionment trough," with many still skeptical or outright doubtful.

However, much like in the early days of containers, there are signs that businesses are beginning to “reshape” the new digital asset industry. In 2025, many traditional banks, brokerage firms, and financial institutions announced or launched digital asset strategies or capabilities. Traditional payment providers have also moved beyond the experimental stage, with reports of a key player making a $2 billion acquisition, indicating a deeper commitment to the space. The growth momentum of stablecoins and tokenization remains strong, with major companies steadily integrating these capabilities. Reshaping is also happening at the government level, with an executive order on digital assets issued in early 2025, followed by the passage of the first crypto-specific regulation in the US, the commencement of a European framework, and even a US state establishing a strategic Bitcoin reserve. Institutional adoption has also made progress, with large investor groups increasing allocations or expressing growing interest.

It's worth noting that those groups facing the greatest barriers to adoption are now involved: pension funds, endowments, sovereign wealth funds, and even a central bank. Realizing the full potential of digital assets could take years, even decades. While the massive capital invested in this space doesn't yet appear to translate into significant change, beneath the surface, existing industries are redefining how financial assets are valued, transferred, and custodied.

The following is a collection of insights from the Fidelity Digital Assets research team for 2026.

We begin by examining the ongoing integration of digital assets with capital markets, followed by an exploration of the emergence of new token holder rights. We then discuss the potential market impact of Digital Asset Treasury (DAT) companies and artificial intelligence (AI), the Bitcoin community's latest concerns regarding forks and quantum computing, and conclude with a macroeconomic outlook.

The integration of digital assets and capital markets – MARTHA REYES

Since its introduction as a speculative experiment, Bitcoin has evolved into a rapidly institutionalizing ecosystem—echoing the trajectory of stocks and other assets, but at a significantly faster pace.

Just as the Amsterdam Stock Exchange consolidated fragmented stock trading, and post-1929 regulation boosted institutional confidence, digital assets have moved from informal forums to regulated exchanges, robust custody solutions, and complex financial instruments.

The rise of digital asset ETPs, regulated futures and options, and institutional lending may mark a new era in which digital assets operate as a complete asset class, integrating infrastructure and products, including ETPs, derivatives, and trading venues. These developments enable capital efficiency, risk management, cross-margin and structured strategies, and unlock deeper capital pools.

Unlike stocks, which have matured over decades, blockchain-based assets appear to be accelerating, driven by programmable settlement, 24/7 liquidity, and borderless infrastructure. The integration of blockchain technology into capital markets may deepen with the availability of more investment instruments, ultimately leading to the tokenization of traditional assets, much like stocks.

As institutional adoption grows, digital assets may become a core component of portfolio construction. New opportunities may emerge, along with associated risks, as demand for leverage, hedging, and yield generation increases. This shift towards institutionalization reflects a broader trend across all digital assets.

However, this seems to contradict Bitcoin's original concept of a decentralized, censorship-resistant payment network backed by scarce monetary commodities that requires and does not rely on financial intermediaries. Financialization introduces intermediaries and synthetic leverage exposure, features that attract institutional investors but can also amplify volatility and often bypass on-chain activity.

Nevertheless, Bitcoin's 21 million hard supply cap is still enforced at the protocol layer, ensuring its scarcity, much like gold but more easily verifiable. Investors can always choose self-custody and conduct peer-to-peer transactions.

Despite the continued uncertainty surrounding long-term miner fee dynamics, Bitcoin appears poised to accelerate its evolution into a widely accepted and integrated financial asset—thanks to the growth of financial products and infrastructure developed around it.

This increasing integration could further position Bitcoin as a reserve asset, given its scarcity, verifiability, and transparency, which allow for clear visibility of where it is held within the network.

From Speculation to Structure: Parallel to the Institutionalization of Stocks

Trading in stocks originated in 17th-century partnerships that issued shares to finance overseas trade. These stocks facilitated risk sharing, capital aggregation, and the potential for asymmetric returns. The Amsterdam Stock Exchange was transformative because it created liquidity through a secondary market. Later, exchanges emerged in other countries, but stocks were initially traded in fragmented, informal venues, leading to poor liquidity and ineffective price discovery.

In contrast, blockchain was initially conceived as a peer-to-peer transaction network without intermediaries. But even the pseudonym creator of Bitcoin envisioned future exchange sites to match buyers and sellers.

Digital asset exchanges have proliferated as retail interest has increased. However, liquidity remains fragmented, and pricing and risk management lack industry standards. Originating as speculation, stocks evolved into a pillar of finance. Participation has expanded over time, but institutional investors such as banks, insurance companies, and pension funds were not active until the late 19th and early 20th centuries.

Institutionalization accelerated with the growth of pension funds and mutual funds. This led to the emergence of derivatives in the 1970s, enabling institutions to better manage risk and develop structured investment strategies.

Digital assets have followed a similar trajectory. Early on, they were dominated by retail speculation and fragmentation, with no regulated venues and a lack of robust custody, settlement, and hedging infrastructure.

Today, the emergence of regulated custodians, ETPs, futures, options, and evolving regulatory frameworks echoes the path of the stock market toward institutionalization.

Derivatives: Origins and Their Increasing Role in Digital Assets

In 1973, the Chicago Board Options Exchange (CBOE) introduced stock options, followed by futures in the 1980s. On the first day, approximately 1,000 contracts were traded for each individual stock.

By 2025, the average daily trading volume of equity futures and options cleared by the OCC will reach 61.5 million contracts. In 2024, notional options flows exceeded $3 trillion, more than five times the daily trading volume of the underlying stocks and ETFs.

For digital assets, volatility (even during downturns) makes hedging important for institutions.

In 2025, the annualized volatility of spot Bitcoin is expected to be between 40% and 50%.

During the pullback in October 2025, Bitcoin options open interest and trading volume hit record highs. Even if volatility continues to decline, capital efficiency or short-term trading could drive continued growth in derivatives.

Perpetual futures have consistently been the preferred tool for investors, far exceeding spot trading volume, because they offer continuous, leveraged exposure without the need for rolling over expiring contracts or physical delivery.

Meanwhile, CME Bitcoin futures have become an effective agent for institutional activity, with open interest reaching $11.3 billion.

Unlike perpetual contracts, these are traditional instruments with mostly fixed expiration dates, available to institutional and professional investors. They are cash-settled, cleared through financial institutions, and seamlessly integrated into existing systems. Historically, a significant portion of exposure has been hedge funds going long on spot or ETPs and shorting futures to capture premiums. CME futures open interest is now comparable to leading domestic exchange Binance, although trading volume, crucial for large institutional trades, remains far lower than perpetual contracts.

Introducing spot-quoted futures that can be held for up to five years and 24/7 trading will better align CME products with the digital asset ecosystem and attract more participants.

In comparison, CME gold futures averaged $196 billion in open interest and $128 billion in trading volume in November 2025. The nominal open interest in gold futures represents approximately 0.7% of the market capitalization of gold, similar to Bitcoin futures on the CME.

While perpetual futures allow traders to take directional views or engage in cash arbitrage, options are used for speculation and specific hedging, return, and volatility strategies. Options activity is higher in stocks because they are popular with both institutional and retail investors. Bitcoin options may eventually surpass spot trading volume. During the volatility surge in October 2025, BTC options trading volume hit a record high, with open interest exceeding $60 billion—mostly on the offshore exchange Deribit—surpassing perpetual futures open interest.

The role of ETP

The U.S. spot digital asset ETPs were launched in January 2024, and by early December 2025, their assets under management had grown to $124 billion. By the second quarter of 2025, institutional participation accounted for approximately 25% of the total. These ETPs provide a convenient, traditionally regulated way to enter the digital asset space.

ETP options have also become a major part of the broader options market, gaining traction since the early 2000s. Similar to other asset classes, Bitcoin ETP options are popular with investors. This trend was evident during the fall 2025 sell-off, when trading activity surged, put option volume hit record highs, and open interest climbed to $40 billion.

In December 2025, Nasdaq applied to increase the option position limit for the largest Bitcoin ETP from 250,000 contracts to 1 million contracts, unlocking additional liquidity. Banks are increasingly offering lending solutions to institutional and high-net-worth clients, using ETPs as collateral and leveraging regulated exchanges and traditional clearing systems. Structured products are also emerging, and institutional lending directly to BTC and ETH holders is expanding; Cantor Fitzgerald has set aside $2 billion, and other major banks have announced their own plans.

The U.S. Commodity Futures Trading Commission (CFTC) has launched a pilot program allowing the use of Bitcoin and Ethereum as collateral. Digital assets are becoming a structural component of the financial system. The key question now is how quickly and to what extent this convergence will occur. Much of this evolution is already happening behind the scenes—through regulated products, custody solutions, and institutional strategies—even as headline price movements remain relatively calm. If history is any guideline, institutions will drive this evolution, expanding synthetic exposure without diminishing Bitcoin's appeal as a reserve asset—a role we expect to strengthen over time.

The Year of Mainstream Token Holder Rights – MAX WADINGTON

The Fidelity Digital Assets research team believes that 2026 will be the year when token holder rights become the primary design variable rather than an ex-post consideration.

In previous cycles, most tokens only offered exposure to a story, rather than cash flow or enforceable rights.

The protocol generates fees and establishes a national treasury, while token holders often have no direct or indirect claim to the revenue. If the core team stops development, there is no mechanism to return the capital, and there is no correlation between project performance and token issuance.

These structural misalignments create a gap between the underlying business and the token's value, often making the sector extremely difficult to assess. For institutional allocators accustomed to underwriting explicit cash flow claims, this disconnect is a primary reason why they view tokens as trading cards rather than long-term positions.

Buyback: A starting point for token holders' rights

The disconnect between the underlying business and its token is beginning to be bridged through a simple yet powerful mechanism: revenue-funded token buybacks.

Hyperliquid serves as the clearest reference point, and arguably the primary driving force, for the rise of token holder rights. Hyperliquid directs its trading revenue (from derivatives and spot markets) to an automated system for buying back its native tokens. This establishes a transparent link between exchange trading volume and token demand. Currently, 93% of all trading revenue is directed to this buyback engine, totaling over $830 million in the past 12 months.

Pump.fun adopted a similar model shortly after Hyperliquid, using launchpad revenue to buy back its tokens on the open market, totaling $208 million since July 2025.

These two applications are among the most popular in the digital asset space over the past year, attracting a lot of attention—leading established DeFi players to converge on the same trend.

A key driving factor appears to be the reduction in regulatory risk associated with this structure. For example, Uniswap governance is shifting towards allocating a portion of protocol and L2 fees to UNI buybacks, citing regulatory developments and token holder priorities as motivations. Aave has introduced a periodic buyback program funded by excess cash. In each case, these blue-chip DeFi applications have recognized the benefits of programmatic token buyback mechanisms for token holders and are retrospectively adjusting their token designs to prioritize this group.

The chart “Fees Generated by Applications Implementing Buyback Programs” shows the fees generated by leading crypto-native applications after implementing token buyback mechanisms. These applications span multiple sectors, including trading, lending, and stablecoins, highlighting that while many digital assets lack a direct link to the underlying business, the most successful fee-generating platforms have taken steps to establish substantial token holder rights.

In our view, the market's reaction to this emerging buyback trend is clear: tokens with a credible link to protocol revenue are increasingly being seen as early-stage, equity-like claims to the business, rather than simply "governance chips." We believe that in 2026, a larger share of total application fees will flow back to digital asset tokens.

The "stack" of token holder rights

The buyback represents a first step toward a comprehensive framework for token holder rights.

As more leading protocols adopt value accumulation mechanisms, competition will increasingly revolve around the broader stack of rights attached to tokens. While this stack includes many components, three areas have emerged as the most clearly defined sources of value.

1. A fairer initial allocation (ICO 2.0)

The initial wave of ICOs was rapid but often unfair, characterized by insiders receiving allocations at extremely low prices, opaque lock-up periods, rigid supply caps, and massive amounts of tokens with unclear uses. Next-generation token issuances are likely to prioritize fairness by addressing these inefficiencies. Teams that can credibly claim "everyone plays by the same rules" will gain an advantage in the community and among institutions. These new structures are often far simpler than the complex allocations of today.

We believe that simplicity fosters transparency, and transparency paves the way for greater capital flows.

2. Performance-based attribution and capital return

Most token vesting today is time-based, regardless of protocol progress. This structure forces token holders to bear the risk of insider vesting without any guarantee of progress.

We anticipate a gradual increase in experiments linking vesting mechanisms to explicit on-chain performance metrics, such as revenue or even token price. Poor performance may slow vesting progress, or companies may completely remove the time component, issuing token rewards only when measurable performance targets are met. The core idea is simple and widely used in traditional enterprises: insiders are rewarded for delivering positive business results rather than simply waiting for the clock to tick.

3. Governance as an investable right

The current default one-token-one-vote governance model grants token holders a voice, but this doesn't necessarily translate into real influence. Holdings are often concentrated, leading to concentrated voting results. The next step is a governance framework that considers the quality of decisions as part of the power package.

This means eliminating the one-token-one-vote model and committing to a decision-making system based on value creation. Futarchy, for example, is a notable model that allows the market to determine whether a proposal is expected to increase business value, tying economic incentives to ongoing governance. While the most efficient path remains uncertain, governance in digital asset businesses faces several inefficiencies. This presents a differentiating opportunity for projects with strong fundamentals.

Impact on institutions and the foundation layer

As these designs are adopted, the token market is likely to split into two categories: rights-light assets and rights-rich assets. Rights-rich tokens, incorporating comprehensive frameworks such as buybacks, fair initial distributions, performance-linked vesting, and robust governance, will occupy the high end of the spectrum and are expected to command a significant premium relative to rights-minimized tokens.

Rights-based light tokens will continue to exist as trading instruments, but their appeal to institutions will be limited. Rights-rich tokens will be easier to model, benchmark, and explain to investment committees. They support equity-like metrics such as payout ratios, earnings growth estimates, and scenario analysis based on protocol usage. At the network level, this shift could centralize economic activity on platforms capable of supporting trusted, rights-rich issuance.

In fact, Solana and Ethereum will significantly benefit from the surge in trading volume and continued investment driven by emerging rights-rich token models. Past digital asset cycles have shown that tokens are powerful tools for bootstrapping networks, but they have also exposed the fragility of token value when holders lack real rights.

The buyback trend is the first concrete response to this market deficiency.

We anticipate that this logic may extend to a more comprehensive rights framework by 2026, emphasizing fairer initial allocations, performance-linked attribution, and a governance framework focused on value creation. As these models spread, a subset of tokens will begin to resemble programmable, auditable claims on digital businesses, providing institutions with a reason to hold them beyond beta.

If this trend gains momentum, the market may see the first fully on-chain IPO, characterized by the rights of these token holders.

Bitcoin Treasury Corporation Landscape and the Impact of Artificial Intelligence – ZACK WAINWRIGHT

Dismantling the Bitcoin Treasury

In 2025, a significant wave of publicly traded companies adding Bitcoin to their balance sheets emerged. At the end of 2024, 22 companies held 1,000 or more Bitcoins, some having begun accumulating them as early as the fourth quarter of 2017. By the end of 2025, this number had more than doubled to 49.

Nearly 5% of the total supply of 21 million units is now held by 49 companies. These companies can be divided into three distinct groups:

• Native: Companies originating from this field that organically accumulate Bitcoin through their operations.

• Strategy: Companies that adopt a Bitcoin-focused strategy have the primary goal of accumulating Bitcoin.

•Traditional: Companies operating outside the Bitcoin ecosystem allocate a portion of their profits and/or corporate treasury to Bitcoin.

Of these 49 companies, Fidelity Digital Assets research identified 18 as native, 12 as strategic, and 19 as traditional.

Although the number is relatively small, the strategic contingent holds nearly 80% of the Bitcoin owned by these companies. In fact, four of the top five Bitcoin holders belong to the strategic category. Excluding the largest holder, the remaining 11 strategic companies hold an average of 12,346 BTC.

This puts the strategic group far ahead of the native queue (which consists mainly of Bitcoin mining companies, averaging 7,935 BTC) and the traditional queue (averaging 4,326 BTC).

In the "Bitcoin Treasury Company History" chart, each data point represents a company, with the x-axis representing the date of its first acquisition and the y-axis representing the total amount of Bitcoin held.

At first glance, several data points stand out, including the lack of new native companies and the significant Bitcoin holdings among newly categorized strategic companies. The Bitcoin strategy has gained popularity over the past year, leading to a large influx of both strategic and traditional companies.

We believe this trend will continue into 2026. Strategic companies may continue to build up their Bitcoin reserves, while more traditional companies will jump on the Bitcoin bandwagon.

However, the native category may evolve further. Many native companies are Bitcoin miners, and as they increasingly get involved in AI, competition for energy infrastructure may shift their focus away from pure Bitcoin mining.

Will the hash rate flatten out by 2026?

A key dynamic we will be monitoring in 2026 is whether the hash rate will begin to level off due to increased competition for limited energy infrastructure driven by AI.

In 2025, Amazon Web Services signed a 15-year, $5.5 billion lease agreement with Cipher Mining (CIFR), while Iren Limited (IREN) announced a $9.7 billion cloud services contract with Microsoft (MSFT) to host AI workloads.

If mining companies continue to utilize existing infrastructure, priorities may shift away from Bitcoin mining as AI offers more lucrative economics. According to CryptoSlate reporter Gino Matos, the intersection of Bitcoin mining and AI hosting economics is between $60 and $70 per PH/s per day for a fleet of 20 joules/terahashes. This means that for most miners operating 20–25 joule rigs, the price of hashrate would need to rise 40–60% from current levels to match the profitability of contract GPU hosting.

The AI data hosting boom demands significant energy resources, and Bitcoin miners are uniquely positioned to immediately undertake these projects. This new revenue stream introduces something historically lacking for Bitcoin miners: choice. Previously, miners relied on Bitcoin market cycles. Now, with a potential second revenue stream, these companies may become even more resilient.

However, there are several scenarios that could make the numbers work in favor of Bitcoin again: a sharp rise in Bitcoin prices or transaction fees could improve mining profitability; and if miners shift to AI-driven operations, it could further improve economics.

Among these, we believe the most likely outcome is a combination of higher Bitcoin prices and lower hash rates, allowing the mining market to naturally recalibrate.

While a lower hash rate may equate to reduced Bitcoin security, the emergence of AI custodians as a secondary revenue stream makes miners more resilient overall. Therefore, the Bitcoin network may be strengthened.

Furthermore, miners or mining equipment squeezed out by intense competition may re-enter the market in a lower hashrate environment, potentially leading to a more decentralized mining landscape. Large players shifting towards AI, such as Cipher Mining (CIFR) or Iren Limited (IREN), may also sell surplus mining equipment to smaller domestic and international operators. In 2026, we may see hashrates flatten as major miners cease expansion and potentially scale back operations to favor more lucrative AI hosting revenue.

From Forks to Quantum Bits: Bitcoin at a Crossroads — DANIEL GRAY

The Rise of Knots

While 2025 ended relatively smoothly for investors, the situation was not so for the developer community.

Numerous extension projects and Bitcoin Improvement Proposals (BIPs), such as OP_CHECKTEMPLATEVERIFY (CTV) (BIP-119) and OP_CAT (BIP-420), are still awaiting a path forward.

In addition to these proposals, the Bitcoin Core development team has sparked controversy by announcing changes to the default policy settings in the upcoming Bitcoin Core 30 release. The focus of this controversy is the update to `datacarriersize`, a policy setting that directly determines the amount of data that can be inserted with the `OP_RETURN` opcode.

The key point is that OP_RETURN represents an unspent output that nodes can prune from disk, while UTXOs (Unspent Transaction Outputs) must be maintained to validate new transactions. OP_RETURN may be a safer or more efficient way to store arbitrary data on Bitcoin.

However, the current incentive mechanism favors storing data in UTXOs via SegWit and Taproot addresses because they offer significant fee discounts. Historically, OP_RETURN was limited to 80 bytes by default under policy rules. Larger OP_RETURN transactions were not subject to consensus limits but were limited by individual node policies, leading some services to allow users to submit "off-exchange" transactions, bypassing the network's collective mempool and individual policy rules. It's important to note that Bitcoin Core v30 did not change the consensus limit on block size. It remains limited to a total of 4 megabytes.

Assessing the “garbage” narrative

Using historical data, we examined the extent to which the “garbage”-driven growth narrative was substantial. While blockchain size did indeed accelerate significantly after the launch of the Ordinals protocol in 2023, demand—and the resulting chain growth—has gradually returned to historical norms.

Fidelity Digital Assets' research team's projections for block space requirements indicate a range of possible outcomes. If the average block size remains around 1.35 megabytes, the total blockchain size will be less than two terabytes by 2042. In a capped scenario, assuming each block reaches a four-megabyte limit, the chain could exceed four terabytes in just 16 years.

This projected growth assumes a stable block size, which has never been the case for Bitcoin blocks in history, thus representing an extreme scenario. A more realistic scenario suggests that the total blockchain size will be slightly over one terabyte by 2042, reinforcing our view that blockchain growth is unlikely to be a major issue due to this change. This debate has divided the community into two camps: those who support the change (Bitcoin Core supporters) and those who oppose it (Bitcoin Knots supporters).

When reviewing the Core changes, two key questions emerged:

1. Can Bitcoin node operators refuse to relay "junk" transactions?

2. Is arbitrary data a problem that Bitcoin can adequately solve?

Fidelity Digital Assets research believes that nodes should retain the ability to customize their own policy rules. Therefore, we disagree with deprecating this policy variable in future Core releases. However, we also understand Core's rationale, which stems from the second question.

In short, Bitcoin cannot distinguish between "good" and "bad" data because it only deals with 1s and 0s. Enforcing such a distinction would require a centralized system to judge the data, which would undermine Bitcoin's fundamental principles.

The Bitcoin Core change finally removed an outdated and invalid policy rule from the codebase, marking a shift towards a secure, more decentralized data embedding method that does not rely on specific mining pool services. This update aims to maintain Bitcoin's censorship resistance and acknowledge that Bitcoin will serve purposes beyond payments. Measuring the success of either side in the debate is difficult, but it's noteworthy that nodes claiming to run Bitcoin Knots versions quickly rose to the top three node versions.

By mid-October 2025, even with the release of Bitcoin Core v30, Knots' share continued to grow. Interestingly, as of December 15, 2025, Bitcoin Core v30 nodes accounted for over 15% of the network, while Knots version 29.2 followed closely behind at 11%.

free market

The most misunderstood part of this debate is the fee market. Fidelity Digital Assets research opposes the argument that increasing the OP_RETURN size will lead to chain bloat, and the premise that "garbage" is undermining Bitcoin's usability.

Considering on-chain fee data, we must acknowledge that block space demand remained consistently low throughout 2025. Since the advent of Ordinals, Runes, Inscriptions, and BRC-20 tokens—all of which are categorized as "junk" by the Knots camp—block space demand has essentially vanished. Therefore, it seems unlikely that simply making "junk" easier on Bitcoin would immediately create more demand, given the current lack of demand.

Even in a scenario where "garbage" does drive sustained demand, Bitcoin's fee market is fully capable of handling that environment. The high fees of 2023 and 2024 did not represent a catastrophic failure of the network then, and are unlikely to do so in the future. In fact, this dynamic can be seen as a healthy sign of Bitcoin adoption. As Saifedean Ammous wrote in Fiat Standard, "If Bitcoin dies, it will not die from misaligned economic incentives or high transaction fees. It will die from declining demand for Bitcoin."

Bitcoin Governance: Knots vs. Core

The debate between Knots and Core initially stemmed from disagreements over policy rules. Knots users fundamentally opposed using Bitcoin as a database for non-financial transactions, while Bitcoin Core developers concluded that preventing unwanted transactions was an impossible task without a central planner.

Following the release of Bitcoin Core v30, the Knots camp escalated its complaints from a technical strategy to a moral argument surrounding illegal content. This upgrade led to a soft fork proposal that would incorporate the strategy rules into the consensus. This fork has significant implications for the Bitcoin network, its users, and their funds.

While users may disagree with how others use blockchain, Fidelity Digital Assets research believes that maintaining network immutability, decentralization, and censorship resistance is crucial. Without a centralized authority, users inevitably risk “misusing” a widely distributed tool or protocol. However, Bitcoin’s fee market acts as a deterrent against potential abuse. Fees increase as block space demand increases, acting as a filter.

A key takeaway from Bitcoin's low-fee environment this year is that "junk" transactions are not currently competing with financial transactions for block space. Demand for Ordinals and similar non-financial uses is likely to remain relatively low because the immutability of JPEGs and arbitrary data is not a key priority for users. Therefore, demand for these products seems unlikely to grow. The recent growth of the blockchain and high fees appear to be merely an expected consequence of using the Bitcoin network, rather than a direct result of "junk" transactions.

"Better safe than sorry": Staying ahead of the quantum threat

Amidst advancements in quantum computing, another proposal gaining attention is "QuBit – Pay to Quantum Resistant Hash" (BIP-360). This proposal introduces a significant upgrade to the network to protect users from Shor's algorithm, which could potentially reverse engineer private keys from exposed public keys.

Currently, an estimated 6.6 million Bitcoins (worth $762 billion) are at risk of quantum attacks due to exposed public keys. As we enter 2025, the Bitcoin community appears to be preparing for one of several soft forks for consensus changes under development, but the significant emergence of quantum-related interest is surprising. With improvements in the efficiency and computational power of quantum computers, forgotten and lost Bitcoins held in older output types such as Pay-To-Public-Key (P2PK) addresses could become targets. The exact timeline for this threat remains uncertain.

However, it's encouraging to see developers proactively address threats rather than relying on reactive approaches, echoing the BIP-360 developers' motto: "Better safe than sorry." It's important to note that if future quantum computers can utilize Bitcoin wallets, only addresses with exposed public keys will be at risk. Following best security practices and maintaining good address hygiene can significantly reduce this risk.

In 2026, we anticipate an increase in quantum-focused solutions and custodians to stay ahead of the curve on this issue. We also expect new “quantum-resistant” layers and tokens, as well as campaigns promoting products as “quantum-ready.” Self-custodied users should remain vigilant against manipulative and malicious “software updates” pushed by bad actors. The coming year is suitable for both genuine innovators and opportunists. While we do not expect BIP-360 to achieve full consensus immediately, increasing education surrounding the topic is likely to drive momentum toward final approval.

Institutional momentum meets macroeconomic uncertainty – MATT HOGAN

Bullish arguments: liquidity, stimulus, adoption, and valuation expansion

Despite a relatively stable 2025, several structural positive factors suggest that digital assets may be poised for a breakout and return to new all-time highs in 2026.

Liquidity conditions are undergoing a substantial shift, quantitative tightening (QT) appears to be nearing its end, and policy signals point to a gradual easing cycle that may accelerate as Jerome Powell's tenure as Federal Reserve Chairman ends. Fiscal dominance remains the defining theme, with governments increasingly prioritizing growth over tightening.

The prevailing approach appears to rely on growth to escape debt rather than spending cuts. This is reflected in recent legislation that expands the deficit through tax cuts and increased spending, assuming that economic growth will offset the debt. The U.S. national debt alone exceeds a staggering $38 trillion, a figure unlikely to be fully repaid, as the ever-increasing debt-to-GDP ratio only exacerbates the challenges.

Furthermore, interest payments on this debt—currently just under $1 trillion annually—have become the third-largest budget item for the U.S. government. Nominal GDP is close to $30.5 trillion, and the U.S. debt-to-GDP ratio is approximately 125%, higher than 91% in 2010 and 56% in 2000. If history rhymes, this increasing debt burden is likely to be addressed in the short term through looser monetary policy, creating favorable liquidity conditions for the coming year.

One of the most significant potential liquidity unlocks lies in the $7.5 trillion currently held in U.S. money market funds. These assets benefited from high short-term yields during the tightening cycle, but the opportunity cost of holding cash will rise as interest rates normalize.

The shift from money markets to riskier assets—particularly those offering asymmetric upside potential such as digital assets—could be a powerful accelerator of capital inflows. Even a small fraction of this reallocation could create an environment that significantly reinforces the new highs argument.

Coupled with the possibility of reintroducing stimulus checks directly into individual accounts, the market could lay a compelling foundation for increased risk appetite, even if the S&P 500 and gold reach new all-time highs by the end of 2025. Recent increases in global liquidity indicate that major central banks are providing more funds to economies. This is typically achieved by expanding the money supply through lowering interest rates or purchasing government bonds and other securities.

Research from Fidelity Digital Assets shows a strong correlation between Bitcoin and liquidity conditions—more specifically, the M2 money supply. When M2 expands, it typically reflects policies by which central banks or governments inject liquidity into the system through lower interest rates, quantitative easing, fiscal spending, or increased lending. Scarce assets like Bitcoin often benefit from this, acting as a "liquidity sponge." A clear correlation exists when comparing Bitcoin's price to the global economy's M2 growth rate: Bitcoin tends to rise as the M2 supply increases.

Historically, Bitcoin bull markets have coincided with periods of increased global liquidity. With the start of a new global monetary easing cycle and the end of the Fed's QT program, this growth rate is likely to continue rising in 2026, which would be a positive catalyst for Bitcoin prices.

Furthermore, institutional adoption continues to deepen, with institutions showing increased exposure to Bitcoin and Ethereum in 2025. This highlights a shift in institutional investors' views on Bitcoin assets: from purely speculative positions to a core component of their asset allocation strategies.

Spot ETP inflows remain strong, with spot Bitcoin ETPs collectively holding over $123 billion in assets under management (as of November 18, 2025), compared to just under $107 billion at the beginning of the year. Valuation models, from Puell Multiple to MVRV, indicate that current prices remain below historical highs, especially considering healthy network activity and liquidity inflows. If liquidity truly flows back into capital markets, particularly risk assets, digital assets could lead a surge to new highs.

These dynamics, combined with strong on-chain fundamentals such as rising active addresses, increased stablecoin circulation velocity, and robust developer activity, create a compelling backdrop for valuation expansion in 2026.

Bearish arguments: sticky inflation, selling pressure, strong dollar, and market correction.

Despite these bullish signals, macro headwinds remain strong. Inflation, while showing signs of easing, remains sticky, and while policy is gradually becoming less restrictive, it is far from easing. The strong dollar persists, dragging down global liquidity and risk appetite even as the belief in a so-called "de-based" trade grows. Continued geopolitical tensions, a potential US government shutdown in 2025, and regional conflicts inject uncertainty into markets, while the risk of stagflation looms, as growth slows without a corresponding decline in prices.

The long-awaited recession has yet to materialize, but its shadow continues to weigh on sentiment, particularly with shrinking fiscal space and rising concerns about debt sustainability. If the market experiences significant stress or a broader sell-off in 2026, Bitcoin could see the most severe sell-off, partly due to its extremely high liquidity and riskier investment characteristics. This possibility could be especially pronounced after the significant valuation surge of technology and AI companies in 2025.

If these companies start selling, Bitcoin is likely to depreciate along with them, as it has historically been closely correlated with more volatile tech stocks in terms of short-term price movements.

If the market shifts towards general risk aversion, especially if signs of increasing stress begin to emerge, Bitcoin is unlikely to be immune, as all correlations tend to converge during a crisis.

The short-term outlook for digital assets remains uncertain. Holders may have been taking profits and rotating capital elsewhere, and the lack of new inflows is limiting upward momentum.

However, it is worth noting that a major driver of Bitcoin's Q4 2025 pullback was profit-taking by long-term holders, which could signal seller exhaustion and reset the cost base at a new support level near $85,000.

The shakeout of October 10, 2025, remains a psychological and structural shadow. The event triggered forced liquidations and margin calls in the derivatives market, leading to a deleveraging wave and leaving lingering unease. This persistent vulnerability has dampened risk appetite, with market participants reluctant to aggressively re-leverage. While this put short-term downward pressure on digital asset prices, this leverage cleansing and reset could be a positive factor in 2026. The value wiped out by this liquidation event far exceeded that of the FTX crash, but it may highlight Bitcoin's resilience and maturity. Despite the flash crash, Bitcoin stabilized near its local bottom around $80,000, reflecting higher lows during periods of market stress. The significant increase in Bitcoin market depth and liquidity in a short period makes it more resilient. While we highlighted the possibility of looser monetary policy and potential liquidity unlocking in the previous section, these outcomes largely depend on market-data-driven decisions.

Monetary policy may gradually ease, but perhaps not quickly enough. While interest rates are falling, they remain quite restrictive, especially if economic data lags. The Fed seems unlikely to achieve its 2% inflation target without causing labor market stress. If it persists with this mandate, the result could be an extended period of restrictive policy and a potential market correction. If this scenario unfolds, we could see this weakness reflected in lower digital asset prices.

Finally, geopolitical tensions and the risk of stagflation remain unresolved, while a strong dollar continues to weigh on global liquidity. In this environment, even strong on-chain fundamentals may not be enough to offset macroeconomic headwinds. Therefore, the path to new all-time highs is not only uncertain but also likely non-linear and fragile, requiring a decisive shift in policy and sentiment for a sustainable breakthrough. Although Bitcoin has fallen more than 30% from its all-time high, this pullback is far shallower than previous corrections, which have reached depths of 80% or more. Furthermore, Bitcoin's price appears to be holding strong around the $85,000 level, forming higher lows after each pullback from a new all-time high.

Stagflation hasn't happened... just don't tell gold! —Chris Kuiper, CFA

In our 2025 Outlook, we questioned why stagflation seemed to be largely ignored. While this wasn't a prediction, it's not surprising that investors didn't seem to view it as a potential scenario (even if the probability was low).

Fortunately, the market in 2025 does not exhibit the economic contraction or high inflation expected in a stagflation scenario, although inflation will stubbornly remain closer to 3% than the Fed's 2% target. However, looking at gold's record-breaking performance, you might not think so. Gold is projected to return 65% in 2025, one of its highest annual gains since the stagflation periods of the 1970s and 1980s.

In fact, 2025's returns rank fourth among annual gold returns since the end of the gold standard, as shown in the table "Historical Gold Performance: Top 10 Best Years." However, unlike that period, today's market appears to be driven more by geopolitical and financial risks than by pure inflation hedging. Nevertheless, gold has historically moved in waves, carried by the momentum of these large structural shifts. Another strong year for gold is not surprising.

Central banks around the world have been actively buying gold while reducing their holdings of U.S. Treasury bonds. Continued geopolitical risks, de-dollarization, and a weakening dollar further support this trend. These factors collectively reflect a broader trend: a shift away from a dollar-centric system towards allocating assets "outside the system."

But what does this mean for Bitcoin?

We continue to believe that gold and Bitcoin share many similarities as monetary commodities—commodities without a central issuer, without cash flow, and primarily used as a store of value. Most importantly, both can be globally recognized as geopolitically neutral commodities.

Gold's advantage over Bitcoin (and one of the reasons for its surge in 2025) lies in its widespread acceptance by global institutions, central banks, and governments. It also has millennia of history to back it up, a mature infrastructure facilitating easy institutional purchases, and a large market depth and scale. However, we believe more institutions will begin to see some of Bitcoin's advantages over gold and may start allocating to it.

A central bank recently made its first purchase of Bitcoin, a possibility we discussed back in our 2023 outlook. While this was done in a small amount in a "test account," the fact that it indicates the evaluation process is progressing. In our view, this also greatly increases the likelihood that others will follow suit. We believe that both Bitcoin and gold are likely to benefit from the current macroeconomic environment, including high and persistent fiscal deficits, trade wars, and geopolitical events, making it more attractive to hold geopolitically neutral currencies or assets "outside" the system.

While gold and Bitcoin occasionally move in tandem, their long-term correlation is only a mild positive one, which we find somewhat counterintuitively attractive. This suggests that Bitcoin could potentially boost the risk-adjusted return of a portfolio without adding a "leveraged" gold asset.

Historically, gold and Bitcoin have taken turns outperforming. With gold shining in 2025, it wouldn't be surprising if Bitcoin took the lead.