Galaxy’s Steve Kurz observes ‘significant alignment’ influencing the long-term perspective of cryptocurrency.

The firm’s head of asset management indicates that the recent decline in cryptocurrency values signifies a healthy process of deleveraging, while the growth of infrastructure and increased institutional adoption contribute to a positive outlook.

Steve Kurz on CoinDesk TV (Screen grab)

Essential details:

• Recent downturns in the cryptocurrency market have been attributed to unwinding of liquidity and leverage rather than systemic failures, indicating a more advanced market phase compared to 2022, with most forced sales likely already behind us, as stated by Steve Kurz of Galaxy Digital.
• Advancements in stablecoins, tokenization, and the integration of blockchain with conventional finance are accelerating, establishing cryptocurrency as both a financial asset and a foundational element of financial systems.
• Kurz expressed that he does not anticipate a quick V-shaped recovery, but rather expects trading to remain within a range, followed by gradual increases as institutional investment deepens and the “great convergence” between cryptocurrency and traditional finance progresses.

According to Steve Kurz, Galaxy Digital’s (GLXY) global head of asset management and co-head of digital assets, cryptocurrency has evolved beyond a mere asset class to become a vital component of financial infrastructure.

In “The Great Convergence,” the company’s investment outlook for 2026, Kurz outlines a pragmatic approach that acknowledges current possibilities while remaining optimistic about the long-term perspective.

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Kurz argues that the defining narrative of this period is the transformation of assets into infrastructure.

“The integration of traditional financial systems with cryptocurrency infrastructure signifies a significant and enduring evolution in the global financial services marketplace,” Kurz told CoinDesk during an interview.

Galaxy Digital, a financial services and investment firm focused on digital assets, was established in 2018 by Michael Novogratz. It serves as a link between traditional finance and the growing cryptocurrency landscape, offering a range of services including institutional-grade trading, asset management, investment banking, custody, mining, and infrastructure solutions, as well as increasingly consumer-focused products.

A market caught in overlapping cycles

Kurz describes the present market as one where “numerous cycles are overlapping.”

Despite the significant pullback in cryptocurrency prices, he emphasizes that the current levels are below those at which many fundamentally positive developments have taken place. This disconnect makes it “difficult not to be puzzled.”

In his opinion, the primary factor contributing to the recent price decline has been the liquidity and leverage cycle.

While the liquidity event in October and subsequent deleveraging had a considerable impact on markets, it was distinct from 2022, when liquidations revealed structural weaknesses in a less mature market framework.

The current decline is viewed as healthier. The ecosystem has developed more sophisticated financial instruments and improved risk management strategies. Kurz contends that the selloff was “a typical wave of deleveraging,” not an indication of systemic failure within the infrastructure.

Infrastructure is advancing swiftly, and price adjustments typically occur only after noticeable increases in activity and adoption, rather than in anticipation, he noted. When on-chain activity and engagement rise again, the narrative will align with it.

He acknowledges that “there’s always a chance of further declines,” but asserts that most severe selling has likely already taken place. Sufficient pain has been absorbed, making consolidation, range-bound trading, or a gradual upward trend more probable than a V-shaped recovery. His baseline expectation is several months of consolidation followed by a stronger move in the latter half of the year.

A new regime: crypto on a bigger dashboard

Central to his argument is the integration of cryptocurrency into Wall Street’s infrastructure. With new linkages to conventional finance, cryptocurrency is now positioned on a much larger dashboard of global assets, which entails certain trade-offs.

Capital flows now span a wider array of opportunities, and cryptocurrency competes more directly with established assets like gold and emerging themes such as quantum technology. The criteria for attracting global capital have become more stringent.

Kurz suggests that this reflects a maturation of the market. Although the relationship between cryptocurrency and traditional finance remains underdeveloped, it is evolving. Public blockchains are increasingly regarded as institutional-grade infrastructure. Stablecoins and tokenization are transforming payment systems and market structures. The reach of cryptocurrency infrastructure is expanding throughout the financial services sector.

This phenomenon is what he refers to as a bull market in crypto infrastructure. The development of foundational layers—such as custody, compliance frameworks, and integration with banks and fintechs—is clearly progressing. While this may not result in immediate price increases in the short term, it is fundamentally crucial for the long-term value of both the technology and the assets built upon it.

The fusion of asset and technology

At the heart of the “Great Convergence” is the blending of cryptocurrency as an asset class with its function as a technological framework. This integration is leading to the expansion of a more extensive and resilient on-chain economy.

Galaxy remains focused on crypto-native assets and is optimistic about the long-term bridge being constructed between infrastructure and capital markets. Kurz makes it clear: this is not a short-lived “buy the dip” strategy; it represents a multiyear structural realignment.

Sentiment, risks, and the bottoming process

Kurz observes that the gap between price, sentiment, and underlying business activity has “never been wider.” Although market prices have struggled, business activity, particularly on the infrastructure side, continues to thrive. This divergence strengthens Galaxy’s confidence.

He downplays existential concerns, such as the threat of quantum computing, as immediate dangers to the viability of cryptocurrency. More broadly, he notes that periods of intense negativity often coincide with market bottoms. Concurrently, he identifies a more subtle risk: indifference. A decline in relevance within the broader market discussion would be more alarming than volatility itself.

Bitcoin BTC$69,776.57, in his experience, often serves as an early warning signal for broader macro risks before other markets respond. He suggests that BTC may have sensed wider risk-off conditions and absorbed the impact first. This dynamic can operate in both directions.

Having “experienced bitcoin sufficiently,” Kurz believes it can be evaluated through a cyclical macro perspective. Cryptocurrency no longer operates in isolation; it is increasingly interconnected with broader liquidity and risk cycles.

Galaxy’s performance and strategic positioning

In this context, Galaxy is experiencing robust momentum in its core businesses, particularly in infrastructure and asset management. By the end of the previous year, Galaxy had $12 billion in assets on its platform.

On the infrastructure front, Galaxy is doing more than it did a year ago. It offers technology and payment solutions to banks and fintech firms, with its capacity to integrate services with traditional financial institutions continuing to improve.

In asset management, Galaxy is broadening its offerings, including the launch of a fintech hedge fund tailored for wealth and high-net-worth clients.

The disruption of the market structure in financial services signifies a “Fintech 2.0” moment, creating both public and private market investment opportunities, according to Kurz.

“Galaxy’s Fintech Fund will focus on identifying the public market winners and losers of the great convergence, while Galaxy Ventures will maintain its investment in early-stage companies worldwide that are developing high-quality, crypto-enabled financial services.”

Institutional investors, pensions, sovereign wealth funds, and other asset owners often perceive cryptocurrency as cyclical. However, many of these investors are now making new capital allocation choices. Galaxy reports gaining business from banks, wealth management intermediaries, and institutional asset owners, facilitating inward capital flows despite a consolidation phase.

Institutional assets under management (AUM) remain a primary focus, and the firm is observing increased engagement from large clients. The disparity between subdued prices and consistent institutional interest bolsters Galaxy’s long-term thesis.

Owning the great convergence

Ultimately, Kurz articulates Galaxy’s strategy as “owning the entire narrative of the great convergence,” encompassing cryptocurrency infrastructure and on-chain systems through to public markets and asset management.

The firm aims to position itself throughout the stack, capturing both the technological integration of cryptocurrency into traditional finance and the financialization of cryptocurrency assets.

For 2026, the forecast is measured and constructive. Do not anticipate a V-shaped recovery. Expect consolidation, maturation, and ongoing infrastructure development. Expect cryptocurrency to compete on a wider stage for global capital. And expect the narrative to align with the activity once it begins to shift.

In Kurz’s opinion, the groundwork is being established for a broader, more enduring on-chain economy. While prices may lag in the short term, the long-term combination of assets and technology leaves him structurally optimistic about digital assets and confident in Galaxy’s role at the forefront of that convergence.

Read more: Deutsche Bank states that bitcoin’s selloff indicates a loss of confidence, not a failing market