2025 Highlights and 2026 Investment Themes
2025 HIGHLIGHTS AND 2026 INVESTMENT THEMES
Every year end disciplined investors take time to review the year passed for lessons learned, and to think ahead to the investment themes that will drive opportunity going forward.
In today's newsletter, we focus on our year end reflections, and provide you links to explore in more detail should you want to inform your own 2026 investing with the sentiments that are driving our AI, Blockchain, and Crypto activities.
To give you the big "so what" up front, most investors are sorely underexposed to the most important innovations of our age, and yet, for whatever reason, they find it hard to get started.
LONG TERM INNOVATION INVESTORS
At Fifth Era we are long term investors with a focus on exponential technologies which are dramatically changing our world. Our emphasis is on AI, Blockchain, and Crypto and the convergence opportunities between these areas of rapidly evolving innovation. Every year our challenge is the same:
Identify 'inevitable futures' and the powerful tailwinds driving towards them.
Build relationships with the best venture capital investors operating in our areas of focus.
Position capital with both the VC firms through our fund of funds investment strategy, and directly with outstanding teams building with the benefit of a powerful rising tide on their side.
We are very transparent about what we are thinking and where we are investing. For those of you new to this newsletter you can easily learn about our investment theses by watching one of our two recordings which we update periodically:
In addition, we took some time over the break to summarize our thoughts on the state of AI and Blockchain and Crypto as we begin 2026:
If you are thinking about AI and/or Blockchain and Crypto and how they will transform our global economy and everything we do, we would encourage you to find a few minutes to check out these four recordings.
For those of you who prefer to read, what follows is a summary of the Blockchain 2025 Highlights and 2026 Investment Themes only.
2025 HIGHLIGHTS
It was a breakout year for Blockchain and Crypto, with mostly positive momentum gains, but some worrying concerns surfacing especially in the world of altcoins:
1) Fundamental Growth Continued to Build, Powered by Developing Markets.
Real products delivering real consumer value continue to attract users - quicker, cheaper, easier and more accessible really matters and nowhere do we see this plainer than in digital monies passing between digital wallets.
The leading players with names like Circle, Coinbase, Kraken, Tether, Uphold - to name just a handful of our portfolio companies - saw rapid growth during the year.
We see 2025 as the end of the beginning; now the mainstream is coming onboard as a result of the demonstrable consumer value delivered by digital monies, commodities and assets.
2) US Regulatory Inflection Point.
2025 marked a clear shift in regulatory posture at the SEC, CFTC, and the Fed as the US declared it would become the global leader in digital finance.
This was a key milestone for the industry, not least because many of the headwinds that were slowing down progress were eliminated during the year.
Meanwhile, it was also welcomed in the Blockchain startup community as it shifted founders, capital, and energy back to the US.
3) Institutionalization of Blockchain and Crypto.
The year saw meaningful institutional participation return, including large asset managers stepping in, and vast pools of capital embracing the space.
Beyond the capital markets, almost every leading bank, asset manager, and payment company announced it was onboard with pilots, partnerships, and support.
Among institutional investors, digital forms of value are now treated as legitimate asset classes and allocations are rising rapidly.
Advisors from BlackRock and Fidelity on down are now onboard (even JPM and Vanguard!).
See our recent newsletter in which we discuss the recent Cambridge Associates report and 1 - 2% allocation advice: Unlocking Innovation with Blockchain VC Funds.
4) Equity Took Center Stage.
There was a noticeable pivot toward equity ownership in crypto-native companies, particularly at the late stages.
The IPO window, and de-SPAC merger option remain open and there is a remarkable pipeline of leading Blockchain companies that have announced their going public plans.
We saw the arrival of mega mergers and acquisitions, initially powered by leading Blockchain native companies.
Almost every major TradFi company announced a partnership or three with crypto companies, and some investments and small acquisitions were announced in 2025.
5) Some Worrying Concerns Surfacing:
Despite the good news in Blockchain equity, altcoin token prices have drifted downwards as retail traders lose interest, and institutional investors look for intrinsic value and don't find it most of the time.
This has created a pall over the majority of token investments, and is leading to entrepreneurs reconsider the choice of a traditional equity, or a token based project funding structure.
Despite maturation of the industry, some familiar, and perhaps undesirable behaviors also resurfaced in 2025 — celebrity-adjacent projects, politically connected capital, and hype-driven deals.
Digital Asset Treasury companies started the year at a rapid clip, but by year end, premiums were compressing, and concerns surfacing that perhaps we now have too many public DATs.
For much more on these 2025 Highlights please listen to the On The Brink episode in full.
2026 INVESTMENT THEMES
When writing down our 2026 investment themes and predictions, we found ourselves with deja vu. If what follows sounds a bit repetitive, it is. In some ways we expect 2026 to feel like a continuation of 2025, and indeed, adoption will take a decade and more so we should not be surprised that wallet growth, transaction volumes, stablecoin volumes, and RWA launches continue to be in the narrative.
However, long term investors know that the most powerful of tailwinds are not likely to come and go in weeks and months. As just one historical example, we are still benefiting from the transition from mortar to clicks and we have been at that for over 40 years. Industry disruption takes time, but is equally inevitable and visible as we enter 2026.
So here are the five big investment themes we have our eyes on for 2026 in Blockchain and Crypto:
1) Fundamental Growth Likely to Accelerate
The diffusion of innovation curve is now steepening as the early adopters join the pioneers.
We expect 2 to 3 billion new digital wallets to be created over the next 3 to 5 years.
We expect 2026 to see fundamental growth of users embracing digital wallet companies and platforms.
2) Tokenization and Stablecoins Eat the Financial Stack.
Stablecoins and tokenized assets continue absorbing core financial use cases — payments, settlement, treasury management, and more.
We have said this for several years now, but it will be decades before we stop having this one in the top five.
To put this into perspective, there is no money that should not be a natively digital money on tokenized rails and that alone means trillions of dollars of issuance likely over the next few years.
3) Public Market Boom Becoming Bust?
Public markets have become enamored with our industry, but in the past in other areas of innovation, that sometimes has caused irrational exuberance and boom/bust cycles in the public and near public markets.
In 2026 will the IPO window close? Will DATs have their time of reckoning? Will unicorns have to pivot to deSPAC mergers to ensure they can meet their public ambitions? How will AI valuations hold up?
We could see a correction ripple across tech, venture, and crypto markets alike.
So while early and mid stage valuations are more likely to provide headroom, caveat emptor for late stage investments if valuations have become over frothy and the going public window closes down in 2026.
Having said that, we also expect a 2026 merger and acquisition boom as the traditional players seek to build capability, and most blockchain sectors have few leading companies for them to buy.
4) Crypto’s Political Identity Will Be Pivotable in the US Midterms
Even more than in 2024, 2026 will see every politician appreciate that digital natives account for even more of their electorate and an anti blockchain stance gets them nothing good.
To put that into context, every year 1.5% to 2% of the citizenry turns over, and new digital native voters step up to the ballot box. Expect at least 3 to 4% more pro crypto voters in 2026 and 6 to 8% in 2028 when compared to 2024.
Meanwhile, in Washington DC, the single most important piece of legislation to future-proof the industry is the market structure bill; however, it may become hostage to mid term election priorities.
5) Innovation Convergence is Coming.
In 2026 we expect to hear of new, heretofore unimagined new mashups of technology and innovation.
AI, Blockchain, Advanced Computing, Internet of Things, Decentralized Participation all being leveraged together into new offerings that outperform what we have had before.
As examples, AI powered marketing, micropayment platforms to enable device to device commerce, smart agents doing our work for us with fully embedded economic actor capability, and so on.
It's mostly about software, and software is eating the world still.
For much more on these 2026 Investment Themes please listen to the On The Brink episode in full.
IMPLICATIONS FOR DISCIPLINED INVESTORS
We continue to believe that investing into the private stages of AI, Blockchain, and Crypto is compelling if you are investing into the pioneering companies and projects backed by leading venture firms focused on these innovations.
However, most investors are sorely underexposed to the most important innovations of our age, and yet, for whatever reason, they find it hard to get started.
When this was all new, and applications and use cases were just on paper, perhaps caution was to be expected. But now as we enter 2026, we are seeing massive movements of value and enormous industries being disrupted.
Which brings us to our final suggestion to close out this week's newsletter. Every disciplined investor should re-read our prior newsletter and take a quick look at the Cambridge Associates long term data that demonstrates that Blockchain and Crypto venture capital outperform Venture Capital, which in turn outperforms most other asset classes: Fifth Era Newsletter Volume 7, No. 11: Unlocking Innovation with Blockchain VC Funds.
Do not hesitate to reach out to us if you need 1%-2% of your total portfolio allocated to Blockchain venture capital funds by contacting our team at IR@FifthEra.com.
We look forward to talking to you about our investment perspectives and activities.
The Fifth Era Partner Team
About Fifth Era
We are entering a period of unprecedented innovation we call the Fifth Era, and every industry and business will be dramatically impacted. We focus on investing into these new innovations. Fifth Era specializes in investment strategies which construct portfolios of hard-to-access funds and direct investments through our investment strategies - AI Access and Blockchain Coinvestors. Fifth Era's investment strategies are now in their 12th year and to date we have invested in a combined portfolio of 1,500+ companies and projects including 80+ unicorns. In the US we are a SEC registered investment advisor, in the UK a FCA appointed representative and our funds are registered in Switzerland. Visit us at www.FifthEra.com to learn more.
SEC Registration does not imply a certain level of skill or training.
“Focused on Innovation”