The heavy losses inflicted by the October sell-off have left many investors wary of piling back into the sector.
Bitcoin, for example, has continued to decline and is now down about 6% for the year. By contrast, the S&P and the Dow Jones Industrial Average went on to hit record highs in December and each ended 2025 with double-digit gains.
Alex Thorn, who heads research at crypto firm Galaxy Digital, acknowledges all that leverage proved “very damaging,” leading to sharp losses.
“It was definitely a straw that broke the camel’s back here for sure,” he says.
The crash also was a reminder of the boom and bust cycle that has afflicted the sector throughout its short history.
The crypto industry, for example, entered 2022 brimming with hope. The pandemic had helped spark a surge in trading from people stuck at home, leading to a frenzy that boosted all kinds of speculative investments, from cryptocurrencies to digital tokens called NFTs.
But then a series of events, including rate hikes by the Federal Reserve, ushered in a period of intense volatility that eventually led to the collapse of crypto exchange FTX, which in turn sparked a downturn, or “winter,” in crypto parlance. In 2022, the value of bitcoin fell from about $50,000 a coin to under $20,000. That downturn didn’t fully reverse until late 2024 with Trump’s re-election.
Similarly, in the months leading up to 2018, there was a frenzy of investments on initial coin offerings — in which cryptocurrencies were sold similarly to how companies sell shares during initial public offerings. After peaking in January 2018, the crypto market crashed.
Mark Hays, a consumer finance advocate at Americans for Financial Reform, says that the most recent crash is yet another reminder that crypto has long relied on rampant risk-taking.
“These markets thrive on speculation,” he says. “Things are good as long as the music keeps playing.”
“But,” he adds, “sooner or later when those notes kind of die out and the tide goes out, as it were, it exposes the vulnerabilities and fragilities in these markets.”
Many in the crypto industry retain hope that this time, the market will recover more quickly, partly because they believe the industry has matured.
“It’s not going to be a winter in terms of a mass shift again,” says Adam Morgan McCarthy, a senior research analyst at crypto firm Kaiko. “It’s more of an industry now. So if there is a winter or a downturn, it’s not going to be a complete lights-out moment.”
For one thing, many in the industry believe regulators, such as those in the SEC under Atkins, are much more supportive of the industry.
Congress is also growing more supportive. After spending heavily in 2024, the sector is now amassing another huge pile of money to spend in the 2026 midterm elections to once again try to elect more crypto-friendly members.
Crypto companies believe lawmakers could soon pass another critical piece of legislation that would determine, among other things, which regulator will oversee the sector. The House already passed a version of the bill, called the CLARITY Act, that would switch much of the regulatory oversight of the crypto industry to a smaller regulator called the Commodity Futures Trading Commission.
The Senate Banking Committee is now considering its own version of the bill.
There are also signs of growing acceptance by more established Wall Street players. According to Bloomberg, JPMorgan Chase, the world’s biggest bank, is reportedly considering offering crypto trading to its institutional clients.
For McCarthy, developments like these signal increasing integration and stability.
“The guardrails are there. The regulators are comfortable. The banks are comfortable. Firms are comfortable,” he says.
To critics like Hays, however, this is more cause for alarm. As crypto companies more closely integrate themselves into the financial sector, it raises the possibility that the next crypto crash could take more mainstream markets down with it.
“We see all the ingredients necessary to set up financial crises or collapses, either rooted in or amplified by crypto, that parallel what we saw in past crises,” says Hays.
Thorn, at Galaxy Digital, sees no reason to get excessively pessimistic, saying that would be ignoring how many inroads crypto has made towards becoming a more established investment.
But he acknowledges things are uncertain. “You know,” he says, “you can’t have great gains without occasional pains.”
Looking back on 2025, it’s hard to say how long the current downturn will continue, or how occasional pains like these will actually be.
But for now, one thing’s apparent: Once again, this was meant to be crypto’s year. And once again, it hasn’t turned out that way.
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