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|12 min ReadSix Trends Steering Crypto Toward Its Next Cycle
Jax Morales
Senior Analyst
Published
Jan 16, 2026
This year has been a grind for crypto. A president promising to make the United States the capital of crypto and AI did not stop traders from feeling the pain. The October flash crash froze the whole market, and the shock has not fully washed out.
Even so, the macro backdrop and industry tailwinds are quietly lining up for a better quarter and a stronger setup for the next cycle. Under the surface, six big trends are reshaping how money, code, and markets work together. If you care about where crypto is heading, you have to watch these.
Prediction Markets Become Everyday Hedging Tools
Prediction markets have quietly hit a new all-time high in weekly notional volume, touching $3B for the first time recently. The market menu has exploded. Politics, sports, esports, pop culture, mention markets, macroeconomics, crypto, finance, earnings, tech and more now live side by side in the same interfaces.
@Polymarket and @Kalshi sit in the middle as broad, general-purpose platforms where anything exciting can be turned into a contract. Newer players like @trylimitless and @opinionlabsxyz are going deeper. Opinion focuses only on macro, running markets around interest rates in the United States, Europe and Japan. Limitless centers on crypto and offers a wide range of assets across different timeframes.
Traditional crypto options had their big moment in the last bull, then volume fell off a cliff. Two problems killed them. The interfaces were painful, and liquidity thinned out. Prediction markets flip that script. They offer simple, clean UI and UX where anyone can bet without needing to know Greeks or exotic jargon. You buy a Yes share or a No share, that is it. The same structure makes it easy to bootstrap capital by launching exciting markets where participants are both makers and takers.
Traders now use prediction markets the way professionals use options. Someone with a large airdrop can hedge by buying No on that token’s market. A portfolio that is too long can hedge by buying No on a macro or BTC market. The mechanism is simple but powerful. Prediction markets repackaged options into something mainstream users actually understand and enjoy. One set of winners in this shift sits inside machine learning and prediction teams, who finally have liquid, transparent playgrounds for their models.
Machine Learning Teams Turn Markets Into Competitive Arenas
A wave of ML-native teams is tripling down on prediction markets as live testbeds for their signals. Groups like @sportstensor, @SynthdataCo, @sire_agent and @AskBillyBets treat these markets as a Darwinian arena.
Sportstensor operates as a liquidity provider layer on Polymarket. It lets any trader join the prediction race and submit signals. Top signals earn alpha token incentives. Those high-performing signals then feed back into Sportstensor’s own predictive models for future monetization.
Synth takes the hedge fund route. It positions itself as a high-frequency prediction market fund that uses its signals to forecast the one-hour and twenty-four-hour prices of crypto assets, then bets on those moves in prediction markets. Early numbers show a 500 percent return on investment, turning 15,000 in about a month.
Sire is building an alpha vault, using Sire models powered by SN44 Score data to trade into sports markets. Initial performance shows profit and loss above 600 percent. It looks like one of the most promising DeFi-style vault products tied to prediction markets and is preparing for a broader public launch.
Billy focuses on analytics and auto-betting using its sports betting insights, known as BCS. The team is finding an edge by providing liquidity for parlay-style bets on Kalshi and plans to scale up this strategy and treasury, with future proceeds flowing back to token holders after treasury size reaches a certain scale.
The beauty here is that multiple Darwinian AI competitions are running in parallel or about to launch. ML teams can plug in, expose their strategies to a real environment and see performance in public. Synth, Sire and Billy can all join Sportstensor competitions and will soon be able to compete in @aion5100’s @futuredotfun War of Markets on Polymarket and Kalshi.
On top of that, Polymarket is teasing a Poly token and newer prediction projects are offering token incentives to attract liquidity and volume. ML teams not only chase mispricings and arbitrage. They can farm tokens while they hunt. It feels similar to the early days of Hyperliquid, except this time the battlefield is prediction markets instead of perpetuals.
Neobank Cards And Stablecoin Rails Go To War
Another front is opening in what looks like a neobank war. Major Web2 startups and large corporations are launching their own L1 or L2 networks and integrating stablecoin rails directly into their products. At the same time, crypto-native teams are pushing up into real-world financial services.
Projects like @ether_fi, @useTria, @AviciMoney, @UR_global and others now let users swipe non-custodial crypto spend cards in the real world, paying straight from their onchain balances. In a very short time, a blue ocean turned into a crowded field with more than 20 serious players chasing the same crypto customer.
Today they differentiate on a few levers. Cashback and rebate percentages are one. Tria pushes hard here with some of the highest rebates, but attaches a yearly subscription fee. FX, transfer and ATM fees are another set of knobs. Travel perks, hotel status, lounges and event access help attract higher-value users. Earn and DeFi integrations matter too. EtherFi plays that game well with high yields and borrow-to-spend features that bridge DeFi and daily spend.
Underneath, most of these products share the same architecture. They sit on top of partner banks and issuers that hold Visa or Mastercard licenses. The card is really a front-end user acquisition product, not a full neobank. Compliance sits with the banking partners, not with the crypto project. User balances are virtual balances, not true bank accounts. Services usually stop at crypto spending without a full fiat off-ramp or full-spectrum banking functionality.
That is fine while everyone runs into the same walls. As the fight gets tougher, though, owning the full regulatory and compliance stack becomes a real advantage. Projects that do this can offer real bank accounts, handle multi-currency on- and off-ramps, and plug cleanly into both crypto and traditional rails.
UR, which comes out of the Mantle ecosystem, is already out in front here. It operates under FINMA oversight with Swiss banking permissions. It supports seven fiat currencies and offers both real-world and crypto financial services. Users can move money on and off, and send funds under traditional banking rails across those seven currencies while staying plugged into crypto.
Breakout Crypto Use Cases Stand Out
The breakout applications for crypto are clearer than ever. Trading, predicting, DeFi yield farming, stablecoins and tokenization define the core use cases. The market structure has matured step by step, moving from centralized exchanges to spot DEXs to perpetual DEXs, with Hyperliquid emerging as a standout in the current wave.
On the speculative side, hyper-focused launchpads such as Pumpdotfun kicked off a wave of launch platforms built around narratives. That created a new era of hyper-speculation in tokens. Prediction markets then broke into a broader audience. It is the first time this vertical has felt truly mainstream. The last time crypto saw this kind of cultural visibility was during the NFT mania, when most people were laughing at ugly JPEGs. This time, many people actually like the product.
DeFi now sits as a core pillar. Structured yield products, interest-bearing products, stablecoins, tokenized real-world assets, DePIN and tokenization flows into Wall Street all expand the toolkit. Retail and institutions can own pieces of what they see as the future and earn yield on top of those positions, or use them as collateral to borrow capital.
Centralized exchanges are amplifying these use cases with wallet super apps. Products from Base, Binance, OKX and others are turning wallets into all-in-one experiences that feel accessible to normal users. They simplify access to trading, DeFi, stablecoins and more. At the same time, token launches are coming back. ICO-style offerings are reappearing, with Coinbase going live with the first Monad ICO and other launch platforms such as Legion and Kaito seeing growing adoption.
Crypto AI And Dynamic DeFi Set Up The Next Cycle
Crypto AI has gone through its own filter. The first wave was full of AI memecoins and GPT wrappers that slapped on tokens and called themselves agents. That phase is fading. Now the stack looks more serious. Blockchain rails and stablecoins power agent-to-agent commerce. Cryptographic techniques such as trusted execution environments and zero-knowledge proofs, plus tokenomics tools like incentives and slashing, make AI systems more verifiable and deterministic.
Underneath, infrastructure such as x402, ERC-8004, programmable wallets, metering and billing frameworks, and verifiable inference and compute is laying the base for trustless, continuous collaboration between AI and humans. This stack is meant to let agents and people transact and work together at any time and any place, with guardrails that reduce hallucinations and uncontrolled behavior.
On top of that, Darwinian AI has become a compelling meta-layer. Gamified competitions evolve agents, sharpen signals and improve performance through real-world incentives. The strongest examples so far sit in trading and prediction signals, which fits perfectly with crypto’s native culture.
Ecosystems are leaning into this model. They use token incentives to pull in builders, reward contributors and subsidize research and development for higher-quality AI products. Bittensor’s ecosystem, with its top subnets, has shown early traction here. Even so, token performance for many Crypto AI projects has lagged. A lot of them trade 30 to 90 percent below their initial listing prices, even while they ship strong infrastructure and real utility. That disconnect is worth watching.
DeFi itself is entering a new phase that fits with all this. It already holds more than $130B in total value locked across DEXs, lending and borrowing platforms, yield products and stablecoins. Smart contracts make it verifiable, auditable and highly composable. Many of the top protocols are among the most battle-tested systems in the space. Yet the core infrastructure has been surprisingly static. Concentrated liquidity mechanics and lending and borrowing models have not changed much in years.
The next wave is dynamic DeFi, where protocols adjust in real time. Imagine systems that automatically lever or delever, rebalance LP positions, or move into and out of markets based on predicted price moves of the underlying assets. That is where AI and ML come in.
@AlloraNetwork is a key player pushing ML-driven intelligence into traditional DeFi systems. It is working on ML-powered concentrated liquidity strategies, adaptive leverage and deleverage for LP management, and dynamic yield optimization guided by forward-looking risk signals. Its inference network lets AI and ML engineers contribute models and earn tokens under a Darwinian incentive design that rewards better performance.
At the same time, AI-managed and AI-created DeFi strategies are emerging from @gizatechxyz and @almanak. Giza operates as an AI capital allocator, managing user funds across a curated set of DeFi protocols and strategies. Almanak lets AI agents design and launch tokenized DeFi vaults in minutes, aligned with user-defined strategies. That makes Almanak both a capital allocator that drives TVL into projects and a vault creation platform for fund managers.
As traditional finance merges with DeFi, ML systems improve DeFi’s core value and risk management, and AI curators design more sophisticated products. The result could be much faster DeFi expansion in the next cycle, building a more intelligent, autonomous and adaptive financial layer for the internet economy.
Looking ahead, the big narratives start to converge. Crypto, AI, DeFi, real-world assets, DePIN and even robotics are merging into an interoperable digital economy where humans and agents work together. DeFi becomes more dynamic. AI helps scale it to millions more users. Crypto rails, stablecoins and breakout apps reach more people. Neobanks bridge Web2 and Web3 users, combining both worlds. Prediction markets grow larger, with ML teams at their core as signal engines and liquidity hunters.
Natural selection in markets will speed up. Only a small set of crypto assets is likely to appreciate meaningfully. Many projects will probably look to public listings instead of pure ICO paths, tapping traditional capital markets for liquidity, legitimacy and scale. The next cycle looks like the one where traditional finance and DeFi finally blend in a serious way.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.