The momentum of Bitcoin (BTC) has turned strongly in the fourth quarter. While analysts thought the coin would reach new highs, many now doubt whether BTC can even reclaim its previous peak. Expectations are being adjusted downward as performance deteriorates.
This setback comes despite a favorable macro climate. Demand is decreasing, the market is losing strength, and confidence seems to be declining. What has changed? BeInCrypto spoke with Ryan Chow, co-founder of Solv Protocol, to discuss this change in investor behavior and to see what Bitcoin needs to win in 2026.
How Bitcoin attracted and lost institutional demand in 2025
Historically, the fourth quarter has always been the strongest quarter for Bitcoin, with an average return of 77.26%. The expectations for 2025 were even higher, as institutional adoption accelerated and a growing number of publicly traded companies added Bitcoin to their reserves.
Instead, the market turned. Bitcoin has dropped 20.69% in Q4 so far, while this is normally the most favorable period.
According to Chow, the beginning of 2025 was mainly about the entry of institutions.
"Spot ETFs, ETPs, and new mandates provided sudden access. Institutions arranged their basic Bitcoin allocation and mechanical inflows drove the price up," he said.
But by the end of 2025, the climate had changed. Chow indicated that structural buyers had already built their positions, forcing Bitcoin to compete with rising real yields.
When crypto no longer set new highs, chief investment officers began to wonder why they would hold an asset without returns, when T-bills, corporate bonds, and even AI stocks simply provide returns as long as you invest.
"I think the market is finally facing a truth that has been clear for years: passive holding has reached its limit. Retail is selling, companies are stopping buying, and institutions are pulling back. This time it’s not because they’ve lost confidence in Bitcoin, but because the current market design does not justify large-scale allocation in a high-interest market," Chow added.
Moreover, the executive emphasized that Bitcoin’s market structure has changed. After the ETF and halving trades, Bitcoin transitioned into an overcrowded macro position. The asset has now moved from a structural repricing phase to a carry-and-basis phase, where professional traders now have the upper hand.
The simple "ETF plus halving means price up" expectation has been elaborated. According to him, the next adoption phase will be driven by demonstrable utility and a risk-adjusted return. He told BeInCrypto:
"The first half of 2025 was about access; everyone wanted to secure basic Bitcoin exposure. The second half is about the alternative: now Bitcoin must earn its place against assets that you simply pay to hold."
Bitcoin, often referred to as digital gold, has long been promoted as a hedge against inflation. Chow acknowledges that Bitcoin will likely retain its role as a store of value. However, he emphasized that this narrative is no longer sufficient for institutional investors.
Expert reveals Bitcoin’s key to winning back institutions in 2026
Chow warns that the market may heavily underestimate the scale of macroeconomic change in 2026. According to him, Bitcoin will remain primarily a cyclical and liquidity-dependent asset unless it transforms into a productive form of capital.
In that case, institutions will treat Bitcoin exactly like this: not as a long-term investment, but as a cyclical instrument.
"Bitcoin can no longer win solely on the narrative. It must deliver returns, otherwise it will be structurally discounted. The volatility we see now is the market trying to mature Bitcoin," he noted.
What safe, regulated products could attract institutions again in 2026? Chow indicates that the real opportunity lies in regulated, cash-plus Bitcoin strategies that resemble traditional investments, with clear legal structures, controlled reserves, and a transparent risk profile.
He mentions three categories:
Bitcoin-backed cash-plus funds: BTC in qualified custody, deployed in on-chain Treasury bill or repo strategies, with an additional return of 2 to 4%.
Over-collateralized BTC loans and repos: Regulated vehicles lending against Bitcoin to high-quality borrowers. On-chain monitoring, secure LTVs, and structures that are detached from bankruptcy are important here.
Defined-outcome option overlays: Strategies such as covered calls, wrapped in known regulations like UCITS or 40-Act funds.
For all forms, regulated fund managers, segregated accounts, proof-of-reserves, and compatibility with existing institutional storage are non-negotiable.
"The products that bring institutions back are not exotic. They will resemble Bitcoin-backed cash-plus funds, repo markets, and strategies with predetermined outcomes, known structures, and known risk controls, but then powered by Bitcoin under the hood," Chow said.
He also emphasized that institutions do not need 20% DeFi APY, which is often a warning sign. A net annual return of 2 to 5%, achieved through transparent and collateralized strategies, is enough to shift Bitcoin from “nice to have” to a “core reserve asset”.
"Bitcoin does not need to become a high-yield product to remain relevant. It just needs to go from zero percent to a modest, transparent ‘cash-plus’ profile so that CIOs no longer see it as dead capital," said the co-founder of Solv to BeInCrypto.
This is what Bitcoin returns look like in practice
Chow explained that Bitcoin’s shift to productive capital allows it to transition from a static gold bar to high-quality collateral that can finance T-bills, credits, and liquidity in multiple places. In this model, companies provide BTC in regulated on-chain vaults, receive interest-bearing claims for it, and maintain clear visibility of the underlying assets.
Bitcoin would also be used as collateral in repo markets, as margin for derivatives, and as coverage for structured products. This supports both on-chain investment strategies and off-chain working capital needs.
The result is a multifunctional instrument: Bitcoin as a reserve asset, financing instrument, and an asset that generates returns. This resembles the function of government bonds today, but in a global, 24/7, programmable system.
"If we do this right, institutions will talk less about ‘holding Bitcoin’ and more about ‘financing portfolios with Bitcoin’. It will become the neutral collateral that quietly enables T-bills, credits, and liquidity in both traditional and on-chain markets," Chow indicated.
Institutions want returns: can Bitcoin provide this without undermining its principles?
Although the applications are interesting, the question arises: can Bitcoin provide regulated and risk-adjusted returns on a large scale without losing its core values?
According to Chow, the answer is yes, as long as the market respects Bitcoin’s layered structure.
"The base layer remains conservative; returns and regulation belong at higher layers with strong bridges and clear transparency requirements. Bitcoin L1 remains simple and decentralized, while the productive layer operates on L2s, sidechains, or RWA chains where wrapped Bitcoin collaborates with tokenized government bonds and credit," he explained.
The CEO acknowledges that there are still technical challenges. According to him, the ecosystem needs to grow from trusted multisig methods to institutional-level bridges. Standardized one-to-one covered wrappers must also be created, and real-time risk oracles need to be developed.
"The ideological challenge is tougher: after the fall of CeFi, distrust is high. The solution is radical transparency, on-chain proof-of-reserves, open mandates, no hidden leverage. Importantly: productive Bitcoin remains optional; self-custody remains valid. We do not need to change Bitcoin’s base layer to make it productive. We need to build a disciplined financial layer that institutions trust and cypherpunks can verify," the CEO explained.
Ultimately, Chow’s message is clear: Bitcoin’s next step will not be determined by speculation, but by disciplined financial innovation. If the sector offers transparent, regulated yield solutions without altering Bitcoin’s core principles, institutions will return, not as short-term traders, but as long-term investors.
The path to 2026 revolves around utility, credibility, and Bitcoin. This demonstrates that Bitcoin can keep pace in a world where capital demands productivity.
