The embedded volatility of cryptocurrencies, particularly bitcoin, remains a focal point for investors as 2025 approaches its final stretch. After reaching all-time highs in October, surpassing $125,000, bitcoin has recently plummeted to nearly $85,000. This volatility is sending ripple effects throughout the broader crypto investing community. Despite the chatter about a potential crypto winter circulating in both mainstream media and crypto communities, the truth is that crypto adoption, utilization, and blockchain development are on the rise. One aspect that many investors, particularly those who have only navigated the post-FTX bull market, appear to have overlooked is that bitcoin and crypto represent an asset class. Bitcoin was initially proposed, among other reasons, as a store of value and a hedge against inflation. While this may have been a foundational belief within the bitcoin maximalist community, the realities on the ground have challenged this notion. As crypto continues to gain traction in both investing and policy arenas, the correlation between crypto and other assets has intensified. Geopolitical tensions, interest rates in the United States and abroad, and economic sentiment have collectively impacted most risk-on assets in a comparable fashion. The recent jitters surrounding AI valuations, intensified by Sam Altman’s “code red” memo, alongside the market selloffs of risk-on assets, are not surprising. Despite the headwinds, several headlines are poised to boost investor sentiment and outline the trends that will shape the landscape for crypto investors as we transition from 2025 to 2026.
The ongoing volatility that keeps pushing investor sentiment down and causing outflows from bitcoin investment vehicles is bringing about an unexpected yet surprisingly positive shift in another area of the crypto landscape. In 2025, while bitcoin reached unprecedented price levels, gained policy backing, and captured the attention of mainstream media, stablecoins have subtly secured policy victories that keep bitcoin positioned as an emerging asset. Stablecoins emerged as the focal point of the GENIUS Act, gaining mainstream traction as payment processors, financial institutions, and states such as Wyoming have introduced their own native stablecoins and stabletokens. Stablecoins have consistently been promoted as the safe entry point into the crypto world, and as bitcoin’s volatility makes a comeback, the ongoing growth and adoption of stablecoins underscores the robustness of this stance. Volatility is once again influencing the way bitcoin is perceived within the realms of wealth management and asset management. Recent volatility in the market, particularly the downward trends, may be interpreted by newer and retail investors as a sign of weakness or a prompt to sell. In contrast, institutional investors and those with greater experience appear to view this as a potential buying opportunity or a neutral signal.
Bank of America has emerged as the latest wealth management firm to officially endorse a specific allocation level for digital assets for its clients, utilizing its Merrill, Bank of America Private Bank, and Merrill Edge platforms. While the discussion encompasses digital assets in a wider context, investment strategists at the bank are set to launch coverage of ETF products starting in January, with all five (5) ETFs reported to be backed by bitcoin. Wealth management and asset management might not always adopt the latest trends in investment opportunities, yet the ongoing endorsements and potential fund flows that are likely to follow serve as further evidence of bitcoin’s establishment as a distinct asset class. Vanguard, the $11 trillion asset management powerhouse, has historically positioned itself against cryptocurrency, denying investors the chance to engage with these assets while competitors have reaped billions in inflows by launching products earlier. The pivot enables 50 million clients to access regulated digital asset vehicles through its native mutual fund platform. Although the firm currently has no intentions to introduce its own products and will (understandably) maintain its stance against products not explicitly endorsed by the SEC, the change in tone is clear.
The shift on the brokerage front, alongside the upcoming (2026) opportunity for retirement plan managers to incorporate crypto-linked products into 401(k) plans, suggests that Vanguard is positioning itself for a significant strategy aimed at drawing in investors interested in cryptocurrency. It remains to be seen how quickly the adoption of crypto into 401k plans will come to fruition. However, the fact that Vanguard, after years of resistance, has moved toward a pro-crypto position is sure to encourage others to follow suit. Volatility is a fundamental aspect of the crypto landscape, yet adoption is rapidly gaining momentum among both institutions and individuals.