Crypto’s Great Convergence: A Tale of Pipes, Pips, and Perpetual Perplexity

Finance

What to know, dear reader, if you dare to venture into this labyrinth of ledgers and lunacy:

The crypto market, like a drunken Cossack, has stumbled but not fallen. Steve Kurz, the sage of Galaxy Digital, assures us that the recent declines were mere hiccups of liquidity and leverage, not the death rattle of a system. Ah, maturity! How it blooms in this young and fickle beast.
Stablecoins, tokenization, and blockchain integration are marching forward like an army of nose-blowing bureaucrats, transforming crypto into both a financial asset and a core financial rail. How quaint!
Kurz, with the optimism of a man who has never lost his ruble in a card game, predicts no V-shaped recovery. Instead, we shall waltz in range-bound trading, followed by gradual gains as institutional capital deepens and the “great convergence” between crypto and traditional finance continues. A slow dance, indeed.

Crypto, once a mere trinket for the technologically besotted, is now, according to Kurz, an “ever-more critical part of financial infrastructure.” Ah, how the times have changed! From the wild west of digital coins to the staid halls of financial respectability. Who would have thought?

In “The Great Convergence,” Galaxy Digital’s 2026 investment outlook, Kurz lays out a plan that is as pragmatic as a peasant’s supper-simple, hearty, and with a hint of desperation. The defining story of this cycle, he argues, is the asset-to-infrastructure transformation. How grand! From digital baubles to the very backbone of finance. Truly, we live in an age of miracles.

“The convergence of traditional financial rails with crypto infrastructure represents a significant and durable market structure evolution for global financial services,” Kurz told CoinDesk in an interview. Ah, the poetry of it all! Rails and infrastructure-the very stuff of dreams.

Galaxy Digital, founded by the indefatigable Michael Novogratz in 2018, serves as a bridge between the old world of finance and the new world of cryptocurrency. It offers everything from institutional-grade trading to consumer-facing products. A jack-of-all-trades, if you will, in this digital bazaar.

A market caught in overlapping cycles

Kurz describes the current environment as one where “a lot of cycles are sitting on top of each other.” Ah, the layers of complexity! Like a matryoshka doll, each cycle nestled within the next, waiting to spring forth and confound us all.

While crypto token prices have pulled back substantially, he stresses that the levels reached are now below those at which many fundamentally positive developments have occurred. “Pretty hard not to scratch your head,” he says. Indeed, one might scratch until the scalp bleeds, trying to make sense of it all.

The dominant force behind recent price weakness, according to Kurz, has been the liquidity and leverage cycle. Ah, liquidity! That elusive siren, luring investors to their doom with promises of endless riches. And leverage, the double-edged sword that cuts both ways-a boon in times of plenty, a curse in times of scarcity.

The October liquidity event and subsequent deleveraging weighed heavily on markets, but Kurz assures us that this is not 2022. No, no! Back then, liquidations exposed structural fragilities in a less developed market architecture. Today, the ecosystem is more sophisticated, with better risk-management frameworks. The selloff, he argues, was merely “a regular wave of deleveraging,” not a systemic breakdown. How reassuring!

Infrastructure is growing rapidly, and prices usually respond only after tangible increases in activity and adoption. When onchain activity rises again, the story will coalesce around it. Until then, we wait, like peasants awaiting the harvest, hoping for a bountiful yield.

“There’s always a possibility of a leg down,” Kurz admits, but most of the dramatic selling has likely already occurred. Enough pain has been absorbed that consolidation, range-bound trading, or a gradual grind higher are more likely than a V-shaped recovery. His base case is several months of consolidation followed by a firmer move into the second half. A slow and steady march, like a bear emerging from hibernation.

A new regime: crypto on a bigger dashboard

At the heart of Kurz’s thesis is crypto’s integration into Wall Street’s plumbing. Ah, the plumbing! How it fascinates us, this network of pipes and valves that keeps the financial world flowing. With new connections to traditional finance, crypto is now on a much bigger dashboard of global assets. A position of honor, but one that comes with trade-offs.

Capital now flows across a broader opportunity set, and crypto competes more directly with established assets like gold or emerging themes such as quantum technology. The bar for attracting global capital is higher. But Kurz sees this as evidence of maturity. The relationship between crypto and traditional finance is still immature, but it is deepening. Public blockchains are increasingly viewed as institutional-grade infrastructure. Stablecoins and tokenization are reshaping payments and market structure. The tentacles of crypto infrastructure are spreading across financial services. A bull market in crypto plumbing, indeed!

This is what Kurz calls the fusion of asset and technology. A marriage of convenience, if you will, driving the creation of a larger, more robust onchain economy. Galaxy remains focused on crypto-native assets and believes the long-term bridge being built between infrastructure and capital markets is highly likely to play out. This is no short-term trade, but a multiyear structural shift. A slow and deliberate transformation, like the turning of the seasons.

Sentiment, risks, and the bottoming process

Kurz notes that the spread between price, sentiment, and underlying business activity has “never been wider.” While market prices have struggled, business activity, particularly on the infrastructure side, remains strong. A divergence that gives Galaxy conviction. Ah, conviction! That elusive quality that keeps investors going in the face of uncertainty.

He downplays existential fears, such as quantum computing, as immediate threats to crypto’s viability. More broadly, he observes that periods of intense negativity often coincide with market bottoms. But there is a subtler risk: apathy. A loss of relevance in the broader market conversation would be more concerning than volatility itself. How true! For what is a market without its drama, its highs and lows, its moments of triumph and despair?

Bitcoin, in Kurz’s experience, often acts as a “canary in the coal mine.” Historically, it has been adept at sniffing out macro risk moves before other markets react. It’s possible, he suggests, that BTC sensed broader risk-off conditions and absorbed the pain first. A noble sacrifice, if you will, for the greater good of the market.

Having “lived with bitcoin enough,” Kurz believes it can be assessed through a cyclical macro lens. Crypto no longer trades in isolation; it is increasingly intertwined with broader liquidity and risk cycles. Ah, the interconnectedness of it all! How the world has shrunk, and how the markets have grown.

Galaxy’s performance and strategic positioning

Against this backdrop, Galaxy sees strong momentum in its core businesses, particularly infrastructure and asset management. As of the end of last year, Galaxy had $12 billion in assets on its platform. A tidy sum, indeed, for a company navigating the treacherous waters of the crypto world.

On the infrastructure side, Galaxy is doing more than it was a year ago. It provides technology and payments services to banks and fintech companies, and its ability to integrate services with traditional financial institutions continues to improve. A true bridge-builder, if ever there was one.

As for asset management, Galaxy is expanding its offerings, including the introduction of a fintech hedge fund designed for wealth and high-net-worth channels. Ah, the rich! How they flock to new opportunities, like crows to a shiny object.

The disruption of financial services market structure represents a “Fintech 2.0” moment and creates both public and private-market investment opportunities, according to Kurz. “Galaxy’s Fintech Fund will focus on the public markets winners and losers of the great convergence, while Galaxy Ventures will continue to invest in early-stage companies around the globe that are building high quality, crypto-enabled financial services businesses.” A grand strategy, indeed, for a grand convergence.

Institutional allocators, pensions, sovereign wealth funds, and other asset owners often view crypto as cyclical. But many of these allocators are now making fresh capital allocation decisions. Galaxy reports winning business across banks, wealth intermediaries, and institutional asset owners, facilitating inward capital flows even during a consolidation phase. Ah, the flow of capital! How it ebbs and flows, like the tides of the ocean.

Institutional assets under management (AUM) remains a key focus, and the firm is seeing growing engagement from large clients. The gap between subdued prices and steady institutional interest reinforces Galaxy’s long-term thesis. A thesis as solid as a Russian winter, if you will.

Owning the great convergence

Ultimately, Kurz frames Galaxy’s strategy as “owning the whole story of the great convergence,” from crypto rails and onchain infrastructure all the way to public markets and asset management. The firm is positioning itself across the stack, capturing both the technological integration of crypto into traditional finance and the financialization of crypto assets. A comprehensive approach, for a comprehensive convergence.

For 2026, the outlook is measured, constructive. Don’t expect a V-shaped recovery. Expect consolidation, maturation, continued infrastructure buildout. Expect crypto to compete on a broader stage for global capital. And expect the narrative to catch up to the activity once it turns. Ah, the narrative! How it shapes our perceptions, how it drives our actions. A powerful force, indeed.

In Kurz’s view, the plumbing is being laid for a larger, more durable onchain economy. Prices may lag in the near term, but the long-term fusion of asset and technology leaves him structurally bullish on digital assets, and confident in Galaxy’s role at the center of that convergence. A bullish outlook, for a bullish man. May the winds of fortune blow in his favor.

2026-02-14 19:25