Crypto at the Crossroads: Navigating Volatility and Secular Trends into 2026

December 2025

Dear Investors,

November was a volatile month for crypto assets, with Bitcoin falling approximately 15.0% vs tech stocks falling around 2.3%. The month was also characterized by fluctuating rate-cutting probabilities and broader market uncertainty. We characterized the dynamics as predominantly driven by profit-taking and reducing overall market sensitivity in portfolios. Crypto assets tend to be the first asset class in that pecking order due to their historical volatility. That said, we remain focused on following secular trends and dynamic positioning.

Executive Summary:

The quant view

• The current market environment remains neutral as quantitative indicators do not coherently signal either a strong bullish or strong bearish trend

  
  

• That said, volatility is expected to persist with faster moving indicators pointing to below neutral, but there are no signs of extreme moves or systemic risks currently

The macro view

• The macroeconomic backdrop is characterized by secular tailwinds such as growing global debt, which we predict will drive increased interest in alternative assets

  
  

• Secular trends, such as rising debt levels and geopolitical tensions, are driving long-term demand for digital assets as an alternative to traditional financial systems

Putting it all together

• Portfolio positioning should remain flexible and dynamic, with a focus on tactical opportunities as they arise

  
  

• Investors are encouraged to gradually build or adjust exposures, taking advantage of short-term volatility while keeping long-term trends in mind

The quantitative view based on signals and empirical observations

Despite strong price action this cycle (esp. 2023-2024), we believe there is still room for a higher peak. We have built a proprietary cycle indicator, ranging from 0 to 10, highlighting proximity to peaks and troughs. The latest reading sits at 5, i.e. in the middle of the range. More short-term models, based on the change of the indicator, however, support the recent volatility. Importantly though, the levels signal has not yet moved above 7.

To complement the cycle view with an alternative metric, we built a dynamic trend-following strategy with significant predictive power in our historical analysis. The current reading of this indicator tells us that we are expecting some more volatility, whilst not positioning for extremes (yet).

Given these indicators, the current environment seems muted and lacking catalyst. At the same time, we do not observe any systemic downward risks either and therefore remain neutral as it relates to technical and historical indicators.

The macro backdrop

As outlined above, we are broadly neutral from a technical backdrop, which brings us the next pillar of our market outlook framework: the macro environment.

There are a couple of secular themes that are important for long-term investors:

1. The global debt pile is growing at unprecedented speed, with no end in sight. As a result, the desire for alternative assets will be unstoppable. Let us elaborate a bit on this point:

US debt is expected to grow to 156% of GDP by 2055. Today, the US spends a whopping 13% of its budget on interest payments alone, almost the same as on defense which sits at 15%. In other words, the world’s biggest economy with the strongest military in the world spends almost as much on interest alone than it does on its military.

China’s debt to GDP has grown significantly over the past decades and today sits at over 11.5%. Whilst not as high as other countries in relative terms, we imagine this is only the start of the debt doom cycle as the country needs to support a lagging domestic market, whilst also maintaining high growth commitments.

Shifting to Europe, Germany recently committed to historical fiscal spending, while already spending over 30% of its budget on its welfare. That is important because in today’s polarized political landscape, welfare states will have immense difficulties to ever scale back those promises. It is a one-way road, and we don’t see how this can end well.

2. Digital assets and their importance as an independent financial system are growing, whether one likes it or not. Geopolitical conflicts and sanctions are only fueling this trend (again, whether one likes it or not).

3.     Crypto is becoming part of the technology stack in financial markets

Putting it all together

Considering the secular trends that clearly support digital asset growth over time, paired with the current ability to tactically build positions as short-term factors drive volatility, we encourage investors to revisit their portfolio holdings. At this juncture, it makes sense to either gradually build exposures or consider active approaches to take advantage of asymmetric opportunities.

Lastly, we encourage to listen to iconic investor Paul Tudor jones in his recent CNBC interview as he suggests building positions in crypto and draws historical parallels.

If you would like to discuss any of our current market observations, please reach out to us via email.

info@matrixportam.com

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This is an advertising document. This material has been prepared by Matrixport Asset Management AG for informational purposes only for the sole use of the intended recipient. It does not seek to make any recommendation to buy or sell any particular security or to adopt any specific investment strategy. This document does not contain information material to an investor’s decision to invest in a product. The information should not be regarded by recipients as a substitute for using their own judgment. Neither Matrixport Asset Management AG nor any of its affiliates, or their directors, officers, or employees, accepts any liability for any loss arising from the use of the information in this document. Data therein should not be relied upon as such information is subject to change, without notice, at the discretion of Matrixport Asset Management AG at any time. Investors in crypto assets are subject to the risk of total loss of the amount invested. Crypto assets are highly volatile and may fluctuate extremely in a short period of time. Crypto assets may become illiquid depending on trading platforms or investment product. Therefore, crypto assets are high-risk investments and you should not invest in this asset class unless you understand and can bear the risks involved with such investments. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. We have relied upon and assumed without independent verification, the accuracy and completeness of all information available from public sources.

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