The market correction at the end of 2025 was marked by severe price drops and continuous liquidations, quickly washing out high leverage and short-term speculative funds, leaving a healthier underlying structure for the market. As we entered early 2026, multiple dimensions, from derivatives leverage to spot turnover, pointed to the same conclusion: the crypto market is transitioning from an "overheated gambling table" to a "configurable asset pool." In sync with this intrinsic repair, mainstream institutions like Coinbase Institutional have clearly expressed a "constructive and optimistic attitude" towards the crypto outlook for the first quarter of 2026 in their latest projections, shifting sentiment from defensive to aggressive. Meanwhile, silver prices once surged to $100.27 per ounce, reflecting macro-level unease and a frenzy for safe-haven assets. One is the crazy surge of traditional safe-haven assets, while the other is the convergence of volatility and the reconstruction of order in the crypto market—two seemingly contradictory states coexisting, forming the core issue this article aims to discuss: in the high volatility and new order of 2026, how is capital repositioning itself in the financial landscape?
A Calm Market is Taking Shape After Leverage Liquidation
● Leverage Cleansing: The correction at the end of 2025 was not just a simple price pullback but a systematic deleveraging process. High-leverage contract positions were continuously liquidated in a short period, with funding rates dropping from long-term positive premiums to neutral or even temporarily negative, and the futures contango/backwardation structure significantly converged, indicating that speculative funds were forced to exit. The proportion of spot transactions rebounded, the share of long-term holding addresses increased, and the manipulation space of derivatives on spot prices was compressed, shifting the market from "betting on rises and falls" to a greater focus on allocation and risk management.
● Institutional Sentiment Shift: In its latest market outlook, Coinbase Institutional emphasized that after the cleansing at the end of 2025, the overall market structure is healthier than in previous cycles, thus "maintaining a constructive and optimistic attitude towards the crypto market outlook for the first quarter of 2026." Behind such statements is a shift in sentiment from "cautious observation" to "conditional participation": on one hand, they see leverage decreasing and tail risks converging; on the other hand, the maturity of compliance infrastructure, custody, and compliant products makes heavy allocations a realistic option for investment committees.
● Volatility Decline and Configurability: After leverage was compressed and speculative positions receded, implied volatility significantly declined, the frequency of extreme price surges and drops decreased, and market depth and quote continuity were somewhat restored. For institutions, this "downgrade" in volatility, combined with the increase in compliant products, makes 2026 seen as a more "configurable" stage—crypto assets are no longer just a speculative basket but can be included as an independent factor in asset allocation models alongside equities, credit bonds, and commodities, used to hedge against inflation and enhance portfolio Sharpe ratios.
Tokenized U.S. Treasuries Soar: Ondo…
● Signals of TVL Surge: Tokenized U.S. Treasury protocols represented by Ondo Finance have seen their total locked value at the beginning of 2026 reported by a single source to be approximately $2.5 billion, achieving several times expansion from earlier stages. This figure itself is not enormous but carries strong directional significance: traditional assets are accelerating their "on-chain" transition, not just as a simple price mirror but embedding rights to income and settlement directly into on-chain infrastructure, providing institutions with low-volatility, auditable on-chain dollar rate assets.
● Trajectory of 2024-2025: Looking back at 2024-2025, the volume of tokenized assets evolved from experimental products to "visible curves." Initially, there were only a few tokenized government bonds and money market funds testing the waters; by the latter half of 2025, more asset managers and brokerages joined in, issuing diversified U.S. Treasury, credit, and short-term debt products. Although the volume is still far smaller than the traditional market, the growth rate is significant, gradually becoming a compliant channel for institutions to enter the crypto world—they can start with "understandable U.S. Treasury yields" rather than jumping directly into the high volatility of native tokens.
● Restructuring of Risk: Projects like Ondo link "on-chain yields" to relatively predictable sovereign credit, moving the underlying risks from high-risk DeFi lending and liquidity mining to more stable assets. Investors no longer rely on anonymous borrowers and complex liquidation mechanisms but lock their risk exposure in short-duration U.S. Treasuries themselves. This change transforms on-chain yields from "high interest + high uncertainty" to "medium-low interest + transparent compliance," providing a compromise for institutions wary of native DeFi and introducing new interest rate benchmarks and collateral forms to the crypto market.
Silver Surges Past $100: Safe Haven…
● Extreme Market Conditions and Sentiment: Against a backdrop of accumulating macro uncertainty, intertwined inflation and geopolitical risks, silver prices were once pushed to a peak of $100.27 per ounce, refreshing market memories. While the sustainability of this level remains to be seen, this "break above $100" moment itself is enough to illustrate that traditional safe-haven sentiment is being expressed in extreme ways. Funds are being withdrawn from bonds and stocks, chasing precious metals that possess both monetary attributes and industrial demand narratives, amplifying the price elasticity of commodities like silver to unprecedented levels.
● Safe Haven Frenzy and Crypto Stabilization: Paradoxically, while traditional safe-haven assets like silver are experiencing "out-of-control" market conditions, the crypto market is undergoing structural repair and volatility convergence. The reason is that funds are not making an either-or choice between "traditional vs crypto" but managing different risk buckets within the same asset allocation framework: safe-haven funds are increasing their positions in precious metals and government bonds to hedge against systemic risks; meanwhile, after deleveraging, crypto is being re-evaluated as an acceptable risk asset allocation item due to its high growth potential and improving structure, making the two complementary rather than substitutive at the portfolio level.
● Transmission of Commodity Volatility On-Chain: The extreme volatility of commodities like silver is penetrating the risk ecology of the crypto market through tokenized assets and on-chain derivatives. As more commodity indices, precious metals, and energy prices are mirrored as on-chain contracts, investors can construct cross-asset hedging and arbitrage strategies on the same platform. Each tremor in silver prices could trigger re-mortgaging, margin calls, and liquidations of related tokenized products on-chain, intertwining with the risk preferences of native crypto assets, creating a more complex yet integrated global risk network.
DAO Buybacks and Whale Actions: Chain…
● DAO Proactive Management: Taking the token buyback proposal put forward by Optimism DAO as an example, protocol layers are beginning to engage more actively in managing circulation and price expectations. Although the specific buyback price range and timeline have not been disclosed, this action itself signifies that Layer 2 and other infrastructure projects are no longer content with passively accepting secondary market pricing but are attempting to smooth volatility and strengthen long-term value narratives through treasury management, buybacks, and burn mechanisms. This behavior parallels traditional corporate stock buybacks, gradually aligning governance tokens closer to "equity-like assets."
● Whale Positioning in New Derivatives: On the other hand, on-chain trading behavior is quietly upgrading. A certain whale address deposited 1.82 million USDC into Hyperliquid, marking a high-density bet on a new derivatives platform according to a single source record. Although subsequent specific trading paths and profit-loss situations have not been publicly disclosed, such a large-scale capital migration indicates that deep players have shifted some of their risk exposure from traditional centralized exchanges to more innovative on-chain contracts and perpetual platforms, seeking more flexible leverage, rates, and strategy space.
● Top-Down vs. Bottom-Up Game: When governance actions like those of Optimism DAO, which are "top-down," coincide with "bottom-up" trading behaviors of whales on platforms like Hyperliquid, the on-chain game landscape of 2026 becomes more three-dimensional. Protocol layers shape long-term curves through buybacks, liquidity incentives, and parameter adjustments; large funds influence short-term prices through strategic trading, cross-chain migration, and leverage structures. Both are publicly visible on-chain, engaging in mutual competition and checks and balances, evolving the crypto market from early single-narrative storytelling to a multi-dimensional battlefield interwoven around assets, governance, and strategies.
The Competitive Narrative of Dollar Tokens: From USD1 to PayPal…
● The Competitive Narrative of Dollar Tokens: The market voices surrounding "USD1's market cap surpassing PayPal's PYUSD," although lacking cross-verification from multiple authoritative data sources, reflect a core trend: the competition and substitution effects of compliant dollar assets on-chain are intensifying. Different issuers are engaging in differentiated competition around compliance, scenario implementation, and liquidity, attempting to become the "default dollar vehicle" for cross-border settlements and on-chain transactions, rather than the previously monopolized narrative by a few giants.
● Issuance Wave of 2024-2025: From 2024 to 2025, mainstream institutions and payment giants successively launched various dollar token products. Whether financial institutions aim to "on-chain" bank deposits and money market funds or tech and payment companies project brand credit onto the chain, all point to the same reality: the demand for "one on-chain dollar" is continuously amplifying for cross-border settlements, transaction matching, and DeFi participation. Dollar tokens serve as both the entry ticket for users and the infrastructure for collaboration and collateral among protocols, elevating their role from a simple payment medium to a clearing layer asset for the entire crypto finance ecosystem.
● Diverse Choices of Dollar Vehicles: Different dollar tokens exhibit significant differences in regulatory backing, asset custody, audit transparency, and secondary market liquidity. Some are issued by heavily regulated financial institutions, emphasizing compliance frameworks and reserve transparency; others gain deep usage rights in the DeFi ecosystem through more open cross-chain and protocol integrations. For institutions, the choice of which "dollar vehicle" to use is no longer a single path but a balance between compliance requirements, operational convenience, and yield opportunities, forming a more complex multi-currency dollar liquidity network.
Coexistence of Volatility and Order: 2026…
The market landscape at the beginning of 2026 is a confluence of multiple narratives: traditional safe-haven assets like silver being pushed to extreme price levels in a short time, the accelerated rise of tokenized U.S. Treasury TVL, simultaneous DAO buybacks and whale positioning, and mainstream institutions releasing constructive outlooks. On the surface, it appears to be a stark contrast between the extreme volatility of "silver breaking $100" and the decline in volatility in the crypto market; in essence, it is a microcosm of the global asset reordering in an era of high uncertainty: risks are shifting between different assets, liquidity is being redistributed along pipelines that balance compliance and efficiency, and on-chain is absorbing and reshaping the structure and rhythm of traditional finance.
In such a phase, both institutional and individual asset allocations need to find a new balance between safety and growth. On one hand, by constructing a verifiable "safety layer" on-chain through tokenized U.S. Treasuries, dollar tokens, and some commodity exposures, they can hedge against inflation and systemic risks; on the other hand, they can leverage on-chain native protocols, infrastructure tokens, and derivatives with high growth elasticity to capture excess returns brought by technological and institutional innovations. For large funds, the focus is on how to connect the liquidity paths of these two types of assets under compliance; for individual investors, it is to avoid returning to the old path of high leverage and to manage risks finely within more transparent on-chain tools.
Looking ahead to 2026 and beyond, the evolution of the macro environment, the pace of regulatory frameworks in various countries, and the depth of institutional participation will continue to shape the new structure of the crypto market. If inflation and geopolitical risks continue to rise, extreme market conditions for silver and other commodities may re-emerge and transmit to on-chain through tokenization and derivatives mechanisms; if regulations provide clearer compliance guardrails for tokenized assets and dollar tokens, institutional funds will be more motivated to move more traditional assets on-chain; and as DAO governance matures and whale behaviors become more transparent and observable, on-chain games will further professionalize. Volatility will not disappear, but within the new order, it will increasingly become a resource that is managed and priced, rather than the sole protagonist of the market.
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