The dynamics of Bitcoin (BTC) have sharply reversed in the fourth quarter. Analysts expected new records, but many now doubt whether BTC will regain its earlier peaks. Forecasts are being revised downwards as results worsen.
This decline occurs despite favorable macro conditions. Demand is weakening, the market is losing strength, and confidence seems to be dwindling. What has changed? BeInCrypto spoke with Ryan Chow, co-founder of Solv Protocol, to explain the shift in investor behavior and discuss what Bitcoin needs to succeed in 2026.
How did Bitcoin attract and lose institutional demand in 2025?
Historically, the fourth quarter has been the strongest for Bitcoin, with an average return of 77.26%. Expectations for 2025 were even more ambitious, as institutional adoption accelerated and an increasing number of public companies added Bitcoin to their reserves.
Instead, the market took the opposite course. Bitcoin fell by 20.69% in the fourth quarter, contradicting the previously most favorable period.
According to Chow, the beginning of 2025 is the onboarding of institutions. Chow explained:
ETF, ETP listings, and new mandates triggered a supply shock. Institutions set the baseline Bitcoin allocation in the portfolio, and mechanical inflows drove prices up.
However, by the end of 2025, the environment had changed. Chow reveals that structural buyers have already built positions, forcing Bitcoin to compete with rising real rates of return.
Meanwhile, as the cryptocurrency stopped reaching new highs, investment directors began to ask why hold an asset without income. After all, there are U.S. treasury bills, corporate credit, or AI stocks that yield profits just for holding them. Chow added:
I think the market is finally facing the obvious truth: passive holding has hit a wall. Retailers are dispersing positions, companies are not accumulating, and institutions are retreating. This time, it's not a lack of faith in Bitcoin, but the structure of the market does not justify large allocations at high rates.
Additionally, the co-founder of Solv Protocol pointed out that the structure of the Bitcoin market has changed. After ETF and halving transactions, BTC has turned into a crowded macro position. He noted that the asset has moved from a value restructuring phase to a carry-and-basis phase, dominated by professional traders.
In other words, the simple thesis 'ETF plus halving equals price increase' no longer holds. According to him, the next phase of adoption depends on visible utility and risk-adjusted profit. Chow revealed to BeInCrypto:
The first half of 2025 was about access. Everyone wanted to have base exposure to Bitcoin. The second half is about opportunity cost. Now Bitcoin must earn its place in the portfolio against assets that pay for holding.
Bitcoin, often referred to as digital gold, has long been considered a hedge against inflation. Chow admits that it will likely maintain its identity as a store of value. However, he emphasizes that this narrative is no longer sufficient for institutional investors.
An expert reveals the key for Bitcoin to regain institutions in 2026.
Chow warns that the market may be significantly underestimating the scale of macroeconomic changes in 2026. He claims that if Bitcoin does not become productive capital, it will become a cyclical asset dependent on liquidity.
In such a scenario, institutions will view it this way, not as a strategic component of a long-term portfolio. Chow added:
Bitcoin will no longer win solely on narrative. It must generate income; otherwise, it will be structurally undervalued. The current volatility is a market forcing Bitcoin's maturity.
What safe, regulated profit-generating products will attract institutions in 2026? Chow points out that the regulated Bitcoin cash-plus strategy offers the most opportunities. It resembles classic investment products, with a transparent legal structure, reserve audits, and a clear risk profile.
The co-founder of Solv Protocol identified three categories:
Cash-plus funds secured by Bitcoin: BTC held by a qualified custodian, invested in on-chain strategies in U.S. treasury bonds or repos, with a target return rate of 2 to 4%.
Excessively secured BTC and repo loans: Regulated vehicles lending Bitcoin exclusively to credible entities. On-chain monitoring, conservative LTV, and bankruptcy-resistant structures are the pillars of this solution.
Options strategies with a defined end result: Covered calls, wrapped in known regulatory frameworks like UCITS or 40-Act instruments.
In all solutions, the key remains: regulated manager, separate accounts, reserve confirmations, and compliance with custodial infrastructure for institutions. Furthermore, Chow stated:
Products that will attract institutions back will not be exotic. They will resemble cash-plus funds backed by Bitcoin, repo markets, and defined outcome strategies, known wrappers, known risk control rules, yet driven by Bitcoin underneath.
The leader of Solv Protocol also emphasized that institutions do not need 20% APY in DeFi, which often signals a red flag. A profitable annual return of between 2% and 5% is sufficient. Moreover, it should be achieved through transparent and secured strategies for Bitcoin to transition from a 'nice to have' category to a 'key reserve asset'. The head of Solv Protocol emphasized:
Bitcoin doesn’t need to become a high-yield product to remain relevant. It just needs to transition from zero to a moderate, transparent 'cash-plus' profile for CIOs to stop viewing it as dead capital.
What does profit from BTC look like in practice?
Chow explained that Bitcoin's transformation into productive capital would convert it from a static gold bar into a high-quality collateral capable of financing U.S. bonds, credit, and liquidity across multiple markets. Companies deposit BTC in regulated on-chain vaults, receive yield-bearing claims, and maintain full transparency regarding the underlying assets.
Digital gold would also serve as collateral in repo markets, as a deposit for derivatives, and as support for structured bonds. It would provide backing for both on-chain investment strategies and off-chain working capital.
As a result, we get a multifunctional tool: Bitcoin becomes both a reserve asset, a financing tool, and a profit-generating asset. It reflects the function of current treasuries, yet operates in a global, 24/7, programmable environment. Chow suggested:
If we do this right, institutions won’t talk about 'holding Bitcoin,' but rather about 'financing portfolios using Bitcoin.' It becomes a neutral collateral, quietly powering U.S. bonds, credit, and liquidity in traditional and on-chain markets.
Institutions want profits: Can the king of cryptocurrencies deliver them without compromising its principles?
Applications seem really convincing, however, the question arises: will Bitcoin maintain regulated, risk-adjusted profit on a large scale without losing its fundamentals?
According to Chow, the answer is yes, provided that respect is shown for Bitcoin's layered architecture. The leader of Solv Protocol explained:
The base layer remains conservative; profit and regulation operate in higher layers, with strong bridges and transparent standards. Bitcoin L1 remains simple and decentralized, while the productive layer operates on L2, sidechains, or RWA chains, where wrapped Bitcoin interacts with tokenized treasuries and credits.
Chow acknowledged that several technical challenges need to be addressed. He emphasized that the ecosystem must move from trusted multisigs to institutional-level bridges. Standardized 1:1 wrappers must also be developed, and real-time risk oracles implemented. Chow elaborated:
The ideological challenge is greater: after the collapse of CeFi, skepticism is deep. The answer is radical transparency, on-chain reserve proofs, disclosed mandates, and no hidden leverage. Most importantly, productive Bitcoin remains optional; self-custody of Bitcoin can still be maintained. We do not need to change the base layer of Bitcoin to make it productive. We need to build a disciplined financial layer on top of it — one that institutions can trust and cypherpunks can verify.
Ultimately, Chow's message is clear: the next phase of Bitcoin depends not on narratives or speculation, but on disciplined financial engineering. If the industry delivers transparent, regulated, profitable structures without compromising the fundamentals of BTC, institutions will return as long-term allocators, not speculators.
Meanwhile, the road to 2026 leads through the utility and credibility of Bitcoin, demonstrating that it can compete where capital demands productivity.
To learn more about the latest cryptocurrency market analysis from BeInCrypto, click here.
