The era of explosive Bitcoin (CRYPTO: BTC) rallies is fading, with stablecoins and DeFi set to drive crypto’s real growth next year, according to Galaxy Research’s 2026 outlook.
Bitcoin Faces Volatility Compression After 2025 Whipsaw
In the report published on Dec.18, Galaxy says Bitcoin’s maturation into a macro-style asset is compressing volatility and reducing the odds of the explosive rallies that defined earlier cycles.
Galaxy’s Alex Thorn sees Bitcoin options markets now pricing downside protection more expensively than upside exposure.
He noted the shift aligns Bitcoin more closely with mature macro assets than high-growth technology trades.
Longer-term volatility has declined, driven in part by institutional yield strategies and growing derivatives activity.
While Galaxy reiterated its long-term bullish stance, projecting Bitcoin could reach $250,000 by 2027, the firm warned that 2026 may feel “boring” by comparison.
Thorn said Bitcoin must reclaim the $100,000–$105,000 zone to restore near-term upside momentum.
Solana Gains Ground As Capital Markets Shift Onchain
Galaxy highlighted Solana (CRYPTO: SOL) as a key beneficiary of crypto’s next phase, forecasting that the market capitalization of so-called “Internet Capital Markets” on the network could reach $2 billion in 2026, up from roughly $750 million today.
The research team said Solana’s on-chain economy is maturing beyond meme-driven activity.
They pointed to new launchpad models and revenue-generating applications drawing more sustained capital.
Investor preference is increasingly shifting toward tokens with fundamental value, reinforcing Solana’s role as a venue for financial experimentation rather than short-lived speculation.
Galaxy said inflation reduction proposals are unlikely to pass at the protocol level in 2026.
The firm expects governance focus to shift toward market structure upgrades rather than monetary policy changes.
Stablecoins Poised To Overtake Legacy Payment Rails
Galaxy predicts stablecoins will overtake traditional payment systems, becoming crypto’s primary transaction rail by 2026.
The firm cited sustained 30%–40% compound annual growth in stablecoin supply and rising usage across payments, remittances, and settlement.
Post-GENIUS Act clarity may accelerate adoption, concentrating stablecoins into a few bank- and platform-backed digital dollars.
TradFi-Backed Stablecoins Consolidate Around Distribution And Ethereum Rails
Galaxy expects consolidation among TradFi-backed stablecoins as usage shifts from experimentation toward scaled payments and settlement.
The firm said consumers and merchants will not juggle multiple digital dollars, favoring one or two widely accepted tokens.
A group of major banks, including Goldman Sachs (NYSE:GS), Deutsche Bank (NYSE:DB), Bank of America (NYSE:BAC), and UBS (NYSE:UBS), are exploring G7-backed stablecoins.
PayPal (NASDAQ:PYPL) and Paxos’ PYUSD highlights how distribution through existing payment networks outweighs launching standalone crypto tokens.
Additionally, Galaxy expects Ethereum (CRYPTO: ETH) to remain the main settlement layer, hosting over 60% of global stablecoin supply.
As a result, 2026 likely brings fewer dominant stablecoins, deeper bank partnerships, and tighter integration with legacy payment rails.
DeFi And Onchain Applications Capture More Economic Value
Galaxy also projected that decentralized exchanges could account for more than 25% of global spot trading volume by the end of 2026, up from roughly 15%–17% today.
Lower fees, composability, and reduced friction are expected to continue shifting activity away from centralized venues.
At the same time, the firm said application revenue will increasingly outpace base-layer network revenue.
This shift reinforces the “Fat App” thesis, with Galaxy predicting that crypto-backed lending outstanding could exceed $90 billion by the end of 2026 as institutional participation deepens.
Altcoin ETF Launches Accelerate After SEC Listing Shift
Galaxy expects more than 50 spot altcoin ETFs and another 50 crypto ETFs to launch in the U.S. during 2026.
The firm said SEC approval of generic listing standards is removing friction for new spot altcoin products.
More than 15 spot ETFs tied to Solana, XRP (CRYPTO: XRP), Dogecoin (CRYPTO: DOGE), Litecoin (CRYPTO: LTC), and Chainlink (CRYPTO: LINK) launched during 2025.
Galaxy expects remaining major crypto assets to follow with spot ETF filings as issuer pipelines expand.
Multi-asset and leveraged crypto ETFs are also expected, with over 100 filings currently in progress.
Prediction Markets, Privacy Tokens And AI Payments Expand
Galaxy identified prediction markets as one of crypto’s fastest-growing segments, forecasting weekly trading volumes above $1.5 billion in 2026.
The firm cautioned that increased scrutiny is likely, with the potential for investigations tied to insider trading or market manipulation as volumes grow.
The research team also expects privacy-focused tokens such as Zcash (CRYPTO: ZEC) & Monero (CRYPTO: XMR) to exceed a combined market capitalization of $100 billion.
In parallel, Galaxy said AI-driven payments could become a meaningful share of blockchain activity, with standardized payment protocols gaining traction on networks such as Base and Solana.
Read Next:
Image: Shutterstock
