Author: Cathy Produced by: Plain Language Blockchain Bitcoin has plummeted from $126,000 to $90,000, a drop of 28.57%. Market panic, liquidity crunch, and the pressure of deleveraging have left everyone breathless. Coinglass data shows that the fourth quarter saw significant forced liquidations, severely weakening market liquidity. At the same time, some structural advantages are converging: the U.S. SEC is about to introduce the "innovation exemption" rule, expectations for the Federal Reserve to enter a rate-cutting cycle are growing stronger, and the global institutionalization channel is rapidly maturing. This is the biggest contradiction in the current market: it looks terrible in the short term, but very promising in the long term. The question is, where will the money for the next bull market come from? 01. Retail investors don't have enough money. Let's start with a myth that's crumbling: Digital Asset Treasury (DAT). What is DAT? Simply put, it's a publicly traded company that uses stock and debt to buy cryptocurrencies (Bitcoin or other altcoins) and then makes money through active asset management (staking, lending, etc.). The core of this model lies in the "capital flywheel": as long as the company's stock price can consistently exceed the net asset value (NAV) of its cryptocurrency holdings, it can continuously amplify its capital by issuing stocks at high prices and buying cryptocurrencies at low prices. It sounds great, but there's a catch: the stock price must always maintain a premium. Once the market shifts towards "risk aversion," especially when Bitcoin crashes, this high beta premium can quickly collapse, even turning into a discount. Once the premium disappears, issuing shares dilutes shareholder value, and financing capabilities dry up. More importantly, it's about scale. As of September 2025, although more than 200 companies have adopted the DAT strategy and hold more than $115 billion in digital assets, this figure is less than 5% of the overall crypto market. This means that DAT's purchasing power is simply insufficient to support the next bull market. Worse still, when the market is under pressure, DAT may need to sell assets to maintain operations, which will only add to the selling pressure in a weak market. The market must find larger and more stable sources of funding. 02. The Federal Reserve and the SEC opened the floodgates to inject liquidity. Structural liquidity shortages can only be resolved through institutional reforms. Federal Reserve: Taps and Gates The Federal Reserve's quantitative tightening policy will end on December 1, 2025, marking a crucial turning point. Over the past two years, QT quantitative tightening has continuously withdrawn liquidity from global markets, and its end means that a major structural constraint has been removed. More importantly, there are expectations of interest rate cuts. According to CME's FedWatch tool, the probability of the Federal Reserve cutting interest rates by 25 basis points in December is 87.3% on December 9. Historical data speaks volumes: During the 2020 pandemic, the Federal Reserve's interest rate cuts and quantitative easing caused Bitcoin to rise from approximately $7,000 to around $29,000 by the end of the year. Lower interest rates reduce borrowing costs, driving capital flows to higher-risk assets. Another key figure to watch is Kevin Hassett, a potential candidate for Federal Reserve Chair. He holds a friendly stance towards crypto assets and supports aggressive interest rate cuts. But more importantly, he possesses dual strategic value: One is the "tap"—which directly determines the tightness or looseness of monetary policy and affects market liquidity costs. The other is the "gateway"—which determines the extent to which the U.S. banking system is open to the crypto industry. If a crypto-friendly leader takes office, it could accelerate collaboration between the FDIC and OCC on digital assets, a prerequisite for the entry of sovereign wealth funds and pension funds. SEC: Regulation has turned from a threat to an opportunity SEC Chairman Paul Atkins has announced plans to introduce an "Innovation Exemption" rule in January 2026. This exemption aims to streamline compliance processes, allowing crypto companies to launch products more quickly within regulatory sandboxes. The new framework will update the token classification system and may include a "sunset clause"—the termination of a token's security status once it meets certain decentralization criteria. This provides developers with clear legal boundaries, attracting talent and capital back to the United States. More importantly, it's a shift in regulatory attitude. In its 2026 review priorities, the SEC will remove cryptocurrencies from its separate priority list for the first time, instead emphasizing data protection and privacy. This indicates that the SEC is shifting from viewing digital assets as an “emerging threat” to integrating them into mainstream regulatory themes. This “de-risking” removes compliance barriers for institutions, making digital assets more readily accepted by corporate boards and asset management firms. 03. The truly potential big money If DAT's funding is insufficient, where is the real money coming from? Perhaps the answer lies in three pipelines currently being laid. Pipeline 1: The organization's tentative entry ETFs have become the preferred way for global asset management institutions to allocate funds to the crypto space. Following the US approval of a spot Bitcoin ETF in January 2024, Hong Kong also approved spot Bitcoin and Ethereum ETFs. This global regulatory convergence has made ETFs a standardized channel for the rapid deployment of international capital. But ETFs are just the beginning; more importantly, the maturity of custody and settlement infrastructure is crucial. Institutional investors have shifted their focus from "whether they can invest" to "how to invest safely and efficiently." Global custodians such as Bank of New York Mellon have already provided digital asset custody services. Platforms like Anchorage Digital integrate middleware (such as BridgePort) to provide institutional-grade settlement infrastructure. These collaborations allow institutions to allocate assets without pre-funding, significantly improving capital efficiency. The most imaginative are pension funds and sovereign wealth funds. Billionaire investor Bill Miller predicts that financial advisors will begin recommending allocating 1% to 3% of their portfolios to Bitcoin within the next three to five years. While this may sound like a small percentage, for trillions of dollars in institutional assets globally, a 1%-3% allocation translates to trillions of dollars in inflows. Indiana has proposed allowing pension funds to invest in crypto ETFs. A UAE sovereign wealth fund, in partnership with 3iQ, launched a hedge fund that attracted $100 million, targeting an annualized return of 12%-15%. This institutionalized process ensures predictable and long-term structured institutional inflows, a stark contrast to the DAT model. Pipeline Two: RWA, a trillion-dollar bridge Tokenization of RWA (Real-World Assets) may be the most important driver of the next wave of liquidity. What is RWA? It is the process of converting traditional assets (such as bonds, real estate, and artwork) into digital tokens on the blockchain. As of September 2025, the global RWA market capitalization was approximately $30.91 billion. According to a report by Tren Finance, the tokenized RWA market could grow more than 50 times by 2030, with most companies predicting a market size of $4-30 trillion. This size far surpasses any existing crypto-native capital pool. Why is RWA important? Because it bridges the language barrier between traditional finance and DeFi. Tokenized bonds or treasury bills allow both sides to "speak the same language." RWA brings stable, yield-backed assets to DeFi, reduces volatility, and provides institutional investors with a source of non-crypto-native yield. Protocols like MakerDAO and Ondo Finance are magnets for institutional capital by bringing US Treasury bonds on-chain as collateral. The RWA integration has made MakerDAO one of the largest DeFi protocols in terms of TVL, with billions of dollars in US Treasury bonds backing DAI. This demonstrates that traditional finance actively deploys capital when compliant yield products backed by traditional assets emerge. Pipeline 3: Infrastructure Upgrade Regardless of whether the capital comes from institutional allocation or RWA, an efficient and low-cost transaction settlement infrastructure is a prerequisite for large-scale adoption. Layer 2 processes transactions outside the Ethereum mainnet, significantly reducing gas fees and shortening confirmation times. Platforms like dYdX offer rapid order creation and cancellation capabilities through L2, which is not possible on Layer 1. This scalability is crucial for handling high-frequency institutional capital flows. Stablecoins are even more crucial. According to a TRM Labs report, as of August 2025, stablecoin on-chain transaction volume exceeded $4 trillion, a year-on-year increase of 83%, accounting for 30% of all on-chain transactions. As of the first half of the year, the total market capitalization of stablecoins reached $166 billion, making them a pillar of cross-border payments. A Rise report shows that over 43% of B2B cross-border payments in Southeast Asia use stablecoins. As regulators (such as the Hong Kong Monetary Authority) require stablecoin issuers to maintain 100% reserves, the status of stablecoins as compliant, highly liquid on-chain cash instruments has been solidified, ensuring that institutions can efficiently transfer and clear funds. 03. Where might the money come from? If these three channels can indeed be opened, where will the money come from? The short-term market pullback reflects the necessary deleveraging process, but structural indicators suggest that the crypto market may be on the verge of a new round of large-scale capital inflows. Short term (end of 2025 - Q1 2026): Potential policy-driven rebound If the Federal Reserve ends QT and cuts interest rates, and if the SEC's "innovation exemption" is implemented in January, the market may see a policy-driven rebound. This phase is primarily driven by psychological factors; clear regulatory signals will attract risk capital back. However, this wave of funds is highly speculative, volatile, and its sustainability is questionable. Medium term (2026-2027): Gradual entry of institutional funds As global ETFs and custody infrastructure mature, liquidity is likely to primarily come from regulated institutional pools. Small strategic allocations from pension funds and sovereign wealth funds may also be effective; this type of capital, characterized by high patience and low leverage, can provide a stabilizing foundation for the market and avoids the speculative buying and selling seen in retail investors. Long term (2027-2030): Potential structural changes brought about by RWA Sustained, large-scale liquidity may depend on RWA tokenization. RWA introduces the value, stability, and yield streams of traditional assets to the blockchain, potentially pushing DeFi's total value limit (TVL) to trillions. RWA directly links the crypto ecosystem to global balance sheets, potentially ensuring long-term structural growth rather than cyclical speculation. If this path holds true, the crypto market will truly move from the periphery to the mainstream. 04. Summary The last bull market relied on retail investors and leverage. If the next round comes, it will likely depend on the system and infrastructure. The market is moving from the periphery to the mainstream, and the question has shifted from "whether or not to invest" to "how to invest safely". Money doesn't come suddenly, but the pipeline is already being laid. Over the next three to five years, these channels may gradually open. At that time, the market will no longer be competing for the attention of retail investors, but for the trust and allocation quotas of institutional investors. This is a shift from speculation to infrastructure, and an essential step for the crypto market to mature.Author: Cathy Produced by: Plain Language Blockchain Bitcoin has plummeted from $126,000 to $90,000, a drop of 28.57%. Market panic, liquidity crunch, and the pressure of deleveraging have left everyone breathless. Coinglass data shows that the fourth quarter saw significant forced liquidations, severely weakening market liquidity. At the same time, some structural advantages are converging: the U.S. SEC is about to introduce the "innovation exemption" rule, expectations for the Federal Reserve to enter a rate-cutting cycle are growing stronger, and the global institutionalization channel is rapidly maturing. This is the biggest contradiction in the current market: it looks terrible in the short term, but very promising in the long term. The question is, where will the money for the next bull market come from? 01. Retail investors don't have enough money. Let's start with a myth that's crumbling: Digital Asset Treasury (DAT). What is DAT? Simply put, it's a publicly traded company that uses stock and debt to buy cryptocurrencies (Bitcoin or other altcoins) and then makes money through active asset management (staking, lending, etc.). The core of this model lies in the "capital flywheel": as long as the company's stock price can consistently exceed the net asset value (NAV) of its cryptocurrency holdings, it can continuously amplify its capital by issuing stocks at high prices and buying cryptocurrencies at low prices. It sounds great, but there's a catch: the stock price must always maintain a premium. Once the market shifts towards "risk aversion," especially when Bitcoin crashes, this high beta premium can quickly collapse, even turning into a discount. Once the premium disappears, issuing shares dilutes shareholder value, and financing capabilities dry up. More importantly, it's about scale. As of September 2025, although more than 200 companies have adopted the DAT strategy and hold more than $115 billion in digital assets, this figure is less than 5% of the overall crypto market. This means that DAT's purchasing power is simply insufficient to support the next bull market. Worse still, when the market is under pressure, DAT may need to sell assets to maintain operations, which will only add to the selling pressure in a weak market. The market must find larger and more stable sources of funding. 02. The Federal Reserve and the SEC opened the floodgates to inject liquidity. Structural liquidity shortages can only be resolved through institutional reforms. Federal Reserve: Taps and Gates The Federal Reserve's quantitative tightening policy will end on December 1, 2025, marking a crucial turning point. Over the past two years, QT quantitative tightening has continuously withdrawn liquidity from global markets, and its end means that a major structural constraint has been removed. More importantly, there are expectations of interest rate cuts. According to CME's FedWatch tool, the probability of the Federal Reserve cutting interest rates by 25 basis points in December is 87.3% on December 9. Historical data speaks volumes: During the 2020 pandemic, the Federal Reserve's interest rate cuts and quantitative easing caused Bitcoin to rise from approximately $7,000 to around $29,000 by the end of the year. Lower interest rates reduce borrowing costs, driving capital flows to higher-risk assets. Another key figure to watch is Kevin Hassett, a potential candidate for Federal Reserve Chair. He holds a friendly stance towards crypto assets and supports aggressive interest rate cuts. But more importantly, he possesses dual strategic value: One is the "tap"—which directly determines the tightness or looseness of monetary policy and affects market liquidity costs. The other is the "gateway"—which determines the extent to which the U.S. banking system is open to the crypto industry. If a crypto-friendly leader takes office, it could accelerate collaboration between the FDIC and OCC on digital assets, a prerequisite for the entry of sovereign wealth funds and pension funds. SEC: Regulation has turned from a threat to an opportunity SEC Chairman Paul Atkins has announced plans to introduce an "Innovation Exemption" rule in January 2026. This exemption aims to streamline compliance processes, allowing crypto companies to launch products more quickly within regulatory sandboxes. The new framework will update the token classification system and may include a "sunset clause"—the termination of a token's security status once it meets certain decentralization criteria. This provides developers with clear legal boundaries, attracting talent and capital back to the United States. More importantly, it's a shift in regulatory attitude. In its 2026 review priorities, the SEC will remove cryptocurrencies from its separate priority list for the first time, instead emphasizing data protection and privacy. This indicates that the SEC is shifting from viewing digital assets as an “emerging threat” to integrating them into mainstream regulatory themes. This “de-risking” removes compliance barriers for institutions, making digital assets more readily accepted by corporate boards and asset management firms. 03. The truly potential big money If DAT's funding is insufficient, where is the real money coming from? Perhaps the answer lies in three pipelines currently being laid. Pipeline 1: The organization's tentative entry ETFs have become the preferred way for global asset management institutions to allocate funds to the crypto space. Following the US approval of a spot Bitcoin ETF in January 2024, Hong Kong also approved spot Bitcoin and Ethereum ETFs. This global regulatory convergence has made ETFs a standardized channel for the rapid deployment of international capital. But ETFs are just the beginning; more importantly, the maturity of custody and settlement infrastructure is crucial. Institutional investors have shifted their focus from "whether they can invest" to "how to invest safely and efficiently." Global custodians such as Bank of New York Mellon have already provided digital asset custody services. Platforms like Anchorage Digital integrate middleware (such as BridgePort) to provide institutional-grade settlement infrastructure. These collaborations allow institutions to allocate assets without pre-funding, significantly improving capital efficiency. The most imaginative are pension funds and sovereign wealth funds. Billionaire investor Bill Miller predicts that financial advisors will begin recommending allocating 1% to 3% of their portfolios to Bitcoin within the next three to five years. While this may sound like a small percentage, for trillions of dollars in institutional assets globally, a 1%-3% allocation translates to trillions of dollars in inflows. Indiana has proposed allowing pension funds to invest in crypto ETFs. A UAE sovereign wealth fund, in partnership with 3iQ, launched a hedge fund that attracted $100 million, targeting an annualized return of 12%-15%. This institutionalized process ensures predictable and long-term structured institutional inflows, a stark contrast to the DAT model. Pipeline Two: RWA, a trillion-dollar bridge Tokenization of RWA (Real-World Assets) may be the most important driver of the next wave of liquidity. What is RWA? It is the process of converting traditional assets (such as bonds, real estate, and artwork) into digital tokens on the blockchain. As of September 2025, the global RWA market capitalization was approximately $30.91 billion. According to a report by Tren Finance, the tokenized RWA market could grow more than 50 times by 2030, with most companies predicting a market size of $4-30 trillion. This size far surpasses any existing crypto-native capital pool. Why is RWA important? Because it bridges the language barrier between traditional finance and DeFi. Tokenized bonds or treasury bills allow both sides to "speak the same language." RWA brings stable, yield-backed assets to DeFi, reduces volatility, and provides institutional investors with a source of non-crypto-native yield. Protocols like MakerDAO and Ondo Finance are magnets for institutional capital by bringing US Treasury bonds on-chain as collateral. The RWA integration has made MakerDAO one of the largest DeFi protocols in terms of TVL, with billions of dollars in US Treasury bonds backing DAI. This demonstrates that traditional finance actively deploys capital when compliant yield products backed by traditional assets emerge. Pipeline 3: Infrastructure Upgrade Regardless of whether the capital comes from institutional allocation or RWA, an efficient and low-cost transaction settlement infrastructure is a prerequisite for large-scale adoption. Layer 2 processes transactions outside the Ethereum mainnet, significantly reducing gas fees and shortening confirmation times. Platforms like dYdX offer rapid order creation and cancellation capabilities through L2, which is not possible on Layer 1. This scalability is crucial for handling high-frequency institutional capital flows. Stablecoins are even more crucial. According to a TRM Labs report, as of August 2025, stablecoin on-chain transaction volume exceeded $4 trillion, a year-on-year increase of 83%, accounting for 30% of all on-chain transactions. As of the first half of the year, the total market capitalization of stablecoins reached $166 billion, making them a pillar of cross-border payments. A Rise report shows that over 43% of B2B cross-border payments in Southeast Asia use stablecoins. As regulators (such as the Hong Kong Monetary Authority) require stablecoin issuers to maintain 100% reserves, the status of stablecoins as compliant, highly liquid on-chain cash instruments has been solidified, ensuring that institutions can efficiently transfer and clear funds. 03. Where might the money come from? If these three channels can indeed be opened, where will the money come from? The short-term market pullback reflects the necessary deleveraging process, but structural indicators suggest that the crypto market may be on the verge of a new round of large-scale capital inflows. Short term (end of 2025 - Q1 2026): Potential policy-driven rebound If the Federal Reserve ends QT and cuts interest rates, and if the SEC's "innovation exemption" is implemented in January, the market may see a policy-driven rebound. This phase is primarily driven by psychological factors; clear regulatory signals will attract risk capital back. However, this wave of funds is highly speculative, volatile, and its sustainability is questionable. Medium term (2026-2027): Gradual entry of institutional funds As global ETFs and custody infrastructure mature, liquidity is likely to primarily come from regulated institutional pools. Small strategic allocations from pension funds and sovereign wealth funds may also be effective; this type of capital, characterized by high patience and low leverage, can provide a stabilizing foundation for the market and avoids the speculative buying and selling seen in retail investors. Long term (2027-2030): Potential structural changes brought about by RWA Sustained, large-scale liquidity may depend on RWA tokenization. RWA introduces the value, stability, and yield streams of traditional assets to the blockchain, potentially pushing DeFi's total value limit (TVL) to trillions. RWA directly links the crypto ecosystem to global balance sheets, potentially ensuring long-term structural growth rather than cyclical speculation. If this path holds true, the crypto market will truly move from the periphery to the mainstream. 04. Summary The last bull market relied on retail investors and leverage. If the next round comes, it will likely depend on the system and infrastructure. The market is moving from the periphery to the mainstream, and the question has shifted from "whether or not to invest" to "how to invest safely". Money doesn't come suddenly, but the pipeline is already being laid. Over the next three to five years, these channels may gradually open. At that time, the market will no longer be competing for the attention of retail investors, but for the trust and allocation quotas of institutional investors. This is a shift from speculation to infrastructure, and an essential step for the crypto market to mature.