Institutionalization Doesn't Equal Demand: The Mysterious Decline of Crypto

By October 2025, Bitcoin had broken above $126,000, and institutionalization of the crypto market seemed to be in full swing. Wall Street had ETFs, public companies were raising billions to buy coins, and the White House wanted the US to become the world's crypto capital.

The industry had been lobbying for years for regulatory clarity, and it finally got it. In January 2025, President Trump issued an executive order endorsing the lawful use of public blockchains and stablecoins, creating a presidential working group, and directing agencies towards a framework built around American digital-asset leadership.

But despite all these favorable changes, demand for cryptocurrencies mysteriously disappeared. By August 2026, Bitcoin had dropped to around $62,600, a decline of nearly half its peak in just ten months.

The industry's proponents had assumed that removing regulatory barriers would lead to increased adoption and higher prices. However, this assumption proved wrong. The removal of penalties made it easier for people to own cryptocurrencies, but it didn't create a reason to own more of them.