Bitcoin's (BTC) momentum has sharply reversed in the fourth quarter. While analysts expected the coin to hit new highs, many now doubt that Bitcoin can even regain its previous peak. Forecasts are being revised downward as performance weakens.
This decline comes despite a favorable macro context. Demand is cooling, market strength is fading, and confidence seems to be waning. So what has changed? BeInCrypto spoke with Ryan Chow, co-founder of Solv Protocol, to delve into the shift in investor behavior and explore what it will take for Bitcoin to win in 2026.
How Bitcoin attracted and then lost institutional demand in 2025
Historically, the fourth quarter has always been the strongest for Bitcoin, with an average return of 77.26%. Expectations for 2025 were even more ambitious due to accelerating institutional adoption and the fact that an increasing number of publicly traded companies have added Bitcoin to their reserves.
Instead, the market has reversed direction. Bitcoin is down 20.69% so far in the fourth quarter, going against what was traditionally its most favorable phase.
According to Chow, the beginning of 2025 was marked by the entry of institutions into the sector.
"Spot ETFs, ETPs, and new mandates have created an access shock; institutions were simply securing their base allocation in Bitcoin, and mechanical inflows pushed prices up," he explained.
However, towards the end of 2025, the scenario changed. Chow revealed that structural buyers had already built their positions, forcing Bitcoin to compete directly with rising real yields.
When the cryptocurrency stopped making new highs, chief investment officers began to question why hold an asset that does not generate yield, when government bonds, corporate credit, and even AI-related stocks offer returns simply by staying invested.
"I think the market is finally coming to terms with a truth that has been evident for years: passive holding has reached its limits. Retail is distributing, publicly traded companies have stopped accumulating, and institutions are pulling back. This time it is not because they have lost faith in Bitcoin, but rather because the current market structure does not justify a large allocation in a high-rate context," Chow adds.
Moreover, the executive emphasizes that Bitcoin's market structure has changed. After the ETF trade and the halving, Bitcoin has shifted to an excessively crowded macro position. Chow points out that the asset has moved from a structural repricing phase to a carry-and-basis context, now dominated by professional traders.
The linear thesis 'ETF plus halving equals rising numbers' has now exhausted its momentum. According to him, the next phase of adoption will be driven by demonstrable utility and risk-adjusted returns. He explained to BeInCrypto that,
"The first half of 2025 was about access: everyone rushed to secure a basic exposure to Bitcoin. The second half is the question of opportunity cost; now Bitcoin must earn its place in a portfolio against assets that actually pay you to hold them."
Bitcoin, often referred to as digital gold, has long been promoted as a hedge against inflation. Chow acknowledges that the asset will likely maintain its identity as a store of value. However, he emphasizes that this narrative alone is no longer enough to convince institutional investors.
An expert reveals the key for Bitcoin to win back institutions in 2026
Chow warns that the market may greatly underestimate the scope of expected macroeconomic changes in 2026. He argues that unless Bitcoin evolves into a form of productive capital, it will remain a cyclical asset dependent on liquidity.
In this scenario, institutions would treat it and consider it exactly this way, rather than as a long-term strategic choice.
"Bitcoin will no longer win just by narrative. It must generate yield; otherwise, it will be structurally discounted. The volatility we are seeing now is the market 'pushing' Bitcoin to mature," he states.
What secure and regulated products with returns could bring institutions back in 2026? Chow explains that the real opportunity lies in regulated, 'cash-plus' strategies on Bitcoin, resembling traditional investment products, with clear legal frameworks, certified reserves, and easily understandable risk profiles.
He indicated three categories:
Cash-plus funds backed by Bitcoin: BTC held in qualified custody and employed in on-chain strategies on government bonds or repos, aiming for additional returns between 2% and 4%.
Loans and repos on over-collateralized BTC: Regulated vehicles that lend against Bitcoin to high-quality borrowers. On-chain monitoring, conservative LTV reports, and bankruptcy-proof structures support these solutions.
Predefined outcome options: Strategies such as covered calls, packaged according to regulatory frameworks known as UCITS or 40-Act instruments.
For all these solutions, certain requirements remain essential: regulated managers, separate accounts, proof-of-reserves, and full compatibility with the current institutional custody infrastructure.
"The products that will bring institutions back will not be exotic. They will resemble cash-plus funds backed by Bitcoin, repo markets, and defined outcome strategies, familiar structures, familiar risk controls, only that they will be powered by Bitcoin under the hood," Chow stated.
He also emphasized that institutions do not need a 20% APY from DeFi, which often serves as a red flag. A net annualized return between 2% and 5%, achieved through transparent and collateralized strategies, is sufficient to transform Bitcoin from a '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 move from zero percent to a modest and transparent 'cash-plus' profile, so CIOs stop viewing it as dead capital," explained the co-founder of Solv to BeInCrypto.
What does the yield of Bitcoin look like in practice
Chow detailed that transforming Bitcoin into productive capital would shift it from a static gold bar to high-quality collateral capable of financing T-bills, credit, and liquidity across multiple markets. In this model, companies offer BTC in regulated on-chain deposits, receiving yield rights in return and maintaining clear traceability on the underlying assets.
Bitcoin would also serve as collateral in repo markets, as margin for derivatives, and as collateral for structured notes, supporting both on-chain investment strategies and off-chain working capital needs.
The result would be a multifunctional tool: Bitcoin as a reserve asset, financing asset, and yield-generating asset all at the same time. It mirrors the function of today's Treasuries but operates in a global, continuous, and programmable environment.
"If we reach this goal, institutions will no longer talk so much about 'holding Bitcoin' but rather about 'financing portfolios with Bitcoin.' It becomes the neutral collateral that quietly fuels T-bills, credit, and liquidity in both traditional and on-chain markets," Chow commented.
Institutions want yield; can Bitcoin offer it without compromising its principles?
Although these applications are quite interesting, the question arises: Can Bitcoin support regulated and fair risk-adjusted yield on a large scale without compromising its core principles?
According to Chow, the answer is yes, provided that the market respects Bitcoin's layered architecture.
"The base layer remains conservative; yield and regulation live in the upper layers with solid bridges and transparency standards. Bitcoin L1 remains simple and decentralized, while the productive layer is found on L2, sidechains or RWA chains where wrapped Bitcoin interacts with Treasuries and tokenized credit," he observed.
The executive acknowledged that there are several technical challenges to address. He emphasized that the ecosystem must evolve from trusted multisigs to institutional-level bridges. Additionally, it should anticipate standardized one-to-one wrappers and develop real-time risk oracles.
"The ideological challenge is more difficult: after the collapse of CeFi, skepticism runs deep. The bridge is radical transparency, proof-of-reserves on-chain, declared mandates, no hidden leverage. Crucially, productive Bitcoin remains optional; self-custody remains valid. There is no need to modify Bitcoin's base layer to make it productive. We need to build over a disciplined financial layer, one that institutions can trust and that cypherpunks can verify," the executive explained in detail.
Ultimately, Chow's message is clear: the next phase of Bitcoin will be defined not by narrative or speculation, but by rigorous financial engineering. If the sector can offer transparent, regulated, yield-generating structures without compromising the core principles of Bitcoin, institutions will return, not as short-term speculators, but as long-term allocators.
The road to 2026 goes through utility, credibility, and Bitcoin, demonstrating its ability to compete in a world where capital demands productivity.
