Galaxy: Stablecoins, DeFi, and prediction markets will experience explosive growth in 2026, with Bitcoin expected to reach new highs

Galaxy’s Galaxy Research team recently released 26 predictions for the cryptocurrency market in 2026. They expect institutional adoption of cryptocurrencies to continue, with explosive growth in stablecoins, DeFi, and prediction markets. Despite significant volatility, Bitcoin may still reach new highs. The Galaxy team states that market volatility in 2026 will be substantial and difficult to predict, but the possibility of Bitcoin reaching a new all-time high in 2026 remains. Currently, the options market estimates roughly equal probabilities of Bitcoin reaching $70,000 or $130,000 by the end of June 2026, and similarly for reaching $50,000 or $250,000 by the end of 2026. “We believe that before Bitcoin stabilizes above $100,000 to $105,000, there remains short-term downside risk.”

Key Highlights of the Predictions Although the overall market in 2026 is unpredictable, the Galaxy team boldly predicts that Bitcoin could reach $250,000 by the end of 2027 and is very likely to hit a new all-time high in 2026, thanks to ETF expansion and growing demand for fiat alternatives amid currency uncertainty. The report emphasizes that 2026 will mark a shift in how public blockchains rethink value capture, with application layer revenues doubling as transactions, DeFi, wallets, and emerging consumer applications continue to dominate on-chain fee generation. Value accrual is increasingly shifting from the bottom layer, accelerating application layer value capture and allowing the “Fat App Theory” to continue surpassing the Protocol Theory. Under clearer regulation with the 《GENIUS Act》 in early 2026, stablecoin trading volume will surpass Automated Clearing House (ACH) systems. Stablecoins are expected to scale massively, surpassing historical growth rates. New entrants will compete for market share and integrate into payments, tokenized assets, and enterprise settlements. “Compared to traditional cryptocurrencies, stablecoins still have very high transaction speeds. We see stablecoin supply maintaining a compound annual growth rate of 30%-40%, with trading volume growing in tandem. Stablecoin trading volume has already surpassed major credit card networks like Visa and currently accounts for about half of ACH transaction volume.” Polymarket’s weekly trading volume is expected to continue exceeding $1.5 billion, driven by increased capital efficiency, AI-powered order flow, and broader distribution channels. “Polymarket’s weekly nominal trading volume is approaching $1 billion. We expect this figure to continue exceeding $1.5 billion in 2026 as new layers of capital efficiency deepen liquidity and AI-driven order flow increases trading frequency. Polymarket’s continuously improving distribution mechanisms also accelerate capital inflows.” By the end of 2026, DeFi will account for over 25% of spot trading volume through decentralized exchanges (DEXs), and the total market cap of privacy tokens will soar from the current $63 billion to over $100 billion to meet institutional demand for concealed balances. U.S. cryptocurrency spot ETFs are projected to attract over $50 billion in net inflows, following $23 billion in 2025. As platforms like Vanguard open up, over 100 new products will be launched, including altcoins, multi-asset, and leveraged ETFs. Solana co-founders’ predictions align with the goal of reaching a $1 trillion stablecoin market cap by 2026, despite challenges like inflation proposals that may fail. Galaxy Research predicts that by 2026, five or more digital asset reserve companies (DATs) will be forced to sell assets, be acquired, or shut down entirely. The surge of DATs was seen in Q2 2025, but since October, the market cap to net asset value (mNAV) multiples have started to narrow. The forecast mentions, “After many companies across different sectors transform into DATs to leverage market financing conditions, the next phase will distinguish those with solid development strategies or asset management capabilities from those lacking coherent strategies or asset management skills. To succeed in 2026, DATs need sound capital structures, innovative liquidity management and revenue generation methods, and close cooperation with relevant protocols (if these relationships are not yet established). Scale advantages (e.g., Strategy holding large amounts of BTC) or jurisdictional advantages (e.g., Metaplanet in Japan) may also provide additional benefits. However, many DATs that rushed into the market during the initial hype lack effective strategic planning. These DATs will struggle to maintain their net asset value (mNAV), and may be forced to liquidate assets, be acquired by larger firms, or in the worst case, shut down completely.”