Leverage Flushed, New Highs Ahead: Andrei Grachev’s Take on Crypto in 2026

In one of the latest episodes of The Rollup podcast, DWF Labs’ Managing Partner Andrei Grachev walked through how he sees this stage of the crypto market cycle, leverage hangovers, and unrealistic expectations. He also explained why Falcon Finance was built, what makes a “real” market maker today, how DWF’s crypto venture capital strategy works, and why he still expects new ATHs for cryptocurrencies in 2026 despite gloomy sentiment. Read our recap of the talk with Grachev below.

(The interview with Andrei Grachev starts at 1:24:10)

Why Crypto Is at ATHs, but People Are Still Unhappy

Despite shaky market sentiment, crypto prices have held up well this year. According to Andrei Grachev, the market looks healthier than headlines suggest. Much of excess leverage has already been cleared out, following what he described as the October “nuclear bomb” event. That reset, he said, ultimately strengthened the market, leaving far less leverage in the system today.

In his view, a “virtual bottom” has already formed: “Now, the Bitcoins that could be sold have been sold… I am not talking only about altcoins, I am also talking about BTC.”

At the same time, he points to a run of positive structural news: clearer BTC regulation in the United Arab Emirates and United States, China quietly restarting Bitcoin mining in Sichuan, and pension funds accumulating Bitcoin. If even one of these headlines had dropped in 2021, he argues, “we might have seen Bitcoin at something like $1 million.”

So why the bad mood? Because most people focus on charts and short-term price action, Andrei Grachev believes. Bitcoin has been in a multi-month downtrend, altcoin structures look broken, and that makes it emotionally hard to allocate. Grachev’s stance is the opposite:

“Companies and individuals with capital and sufficient market experience are buying Bitcoin now because it is a good entry point.”

The crowd, he reminded, “buys when the BTC price is going up”, not when it’s on sale.

Falcon Finance and RWAs: Higher Yields in a Rate-Cut World

Being a Founding Partner at Falcon Finance, Andrei Grachev addressed multiple questions about the protocol, its current state and strategy.

Grachev described Falcon as a natural extension of what DWF Labs already does: risk management and pricing”:

“We realized that our main expertise lies in risk management and identifying the fair dollar value of any asset,” he says. “That is how the idea of Falcon Finance emerged.”

Falcon’s flagship product is USDf, a synthetic dollar that lets holders of non-yielding assets turn them into dollar-denominated yield without fully exiting their positions. “If you have an asset that is not yield-bearing, you deposit it into Falcon Finance, receive USDf, and earn dollar-denominated yield,” Grachev explains. USDf can then be redeemed back into USDT, USDC, other stablecoins, or even fiat.

With the Fed Reserve cutting rates and compressing traditional yields, the key to sustaining returns, in his view, is tokenized real-world assets (RWAs), especially private credit. Among the discussed RWAs were Centrifuge's JAA and JTRSY products that are tokenized debt instruments with good on-chain liquidity issued via platforms that allow near-instant cash redemption. Falcon Finance accepts these assets as collateral and issues USDf against them so that users don’t lose exposure to the underlying debt asset, but gain onchain liquidity.

The combination of yielding tokenized credit and a synthetic dollar is how he expects Falcon to keep delivering yield even as interest rates in traditional finance compress:

“We believe this market will continue to grow within crypto,” he added, and Falcon’s goal is to have “infrastructure that is ready and battle-tested for when more institutions enter the space.”

What Distinguishes a Good Crypto Market Maker

The conversation then shifted to the topic of crypto market making. Grachev shared: short-term “crime pumps” and manipulation aren’t a business model of a crypto market maker, they’re a liability:

“The strategies you mentioned are not sustainable business models. They may work for a short period of time, but they carry significant future risks.”

He points out that basic crypto liquidity provisioning has been commoditized, as almost any company can buy software and run a basic market-making operation today.

Margins on pure market making are thin, and the old era of making money on mere providing liquidity and reports is, in his words, over.

So what does a good crypto market maker look like now? For Grachev, it’s a full-stack partner:

“A good [crypto] market maker today is one that supports go-to-market strategy, user acquisition, partnerships, exchange relationships, and connections with VCs and key counterparties.”

In other words, liquidity is the baseline; the real value is helping a blockchain project grow into something traders actually want to own, so the token doesn’t need artificial support. As he notes, market manipulation does not work long term: when “something pumps without a fundamental reason, proper algorithms signal that it should be sold”.

How DWF Labs’ Venture Capital Business Works

Asked how DWF Labs works on crypto venture funding deals, Andrei Grachev kept returning to one idea: real products, real users.

“A product must be genuinely useful. Tokenomics alone are not enough,” he says. “Even if you explain that people will use your token and the price will go up, it does not matter if the product itself is useless.”

He breaks down what he sees as problems in the crypto market worth solving: trading, lending and money markets, payments, investments, infrastructure, and yield. These, he says, are “enduring narratives” that will matter across cycles.

When evaluating a crypto project, DWF Labs looks at whether it can compete in one of those areas and whether the team can attract real users, not just mercenary airdrop farmers. “The token should enhance the product, not be the product itself,” Grachev stresses, citing Hyperliquid as an example where people were actively trading on the platform before the token existed.

Right now, he says, DWF Labs is more focused on investing in developing Web3 projects, incubating them, and helping them grow rather than buying tokens simply because prices have fallen. Cheap relative to last month is not enough:

“A token being priced higher a month ago does not automatically make it cheap today… Fundamentals matter.”

Why Andrei Grachev Is Still Bullish on New ATHs

Despite the noise, Grachev’s outlook for crypto is clear: he expects new all-time highs in the first half of 2026, reasons being a blend of market structure and macro. 

First, leverage has been “reduced and liquidated,” which “has made the crypto market healthier.” Second, regulation is turning from hostile to pragmatic: “There is nothing fundamentally bad, only increasingly bullish regulation,” he says, pointing to recent SEC comments and clearer frameworks for ICOs and BTC in key jurisdictions.

Third, the macro backdrop still favors scarce digital assets: 

“The trillions in fiat markets and the global inflation of fiat currencies will make crypto, and especially Bitcoin, stronger in 2026.”

Grachev also notes that institutional capital has a timing pattern: many big allocators close their financial year in December 2025 and avoid large trades that could affect P&L or bonuses. As a result, he expects fresh capital to show up from January onward.

He’s skeptical that the old four-year halving cycle still explains much of the price action, and puts more weight on leverage, regulation and macro than on mining schedules.

The Next Catalyst for the Bull Crypto Market in 2026

When pressed on what the next big catalyst might be, Andrei Grachev pushed back on the idea of a single magic trigger.

“I think the crypto market is already fairly developed in terms of products, and growth will not come from just a single flow,” he says.

He expects institutions to “definitely join, likely through structured products,” while consumer-grade tools quietly grow the user base. One example he gives is Xiaomi’s decision to pre-install a crypto wallet on every new smartphone: “It’s not about that specific wallet, it’s about crypto exposure.”

As more people are passively exposed to crypto infrastructure, a natural conversion will happen and more users will come in. This is a gradual, organic process, only a matter of time.

In Grachev's view, there are already plenty of strong primitives. The next leap forward will be driven less by a brand-new mechanism and more by capital and users finally flowing into the tools that already exist. Institutions, structured products, better UX, and a cleaner market after the leverage flush. Together, that is the real catalyst he’s betting on.

Disclaimer: This article is intended for general informational purposes only and does not constitute financial advice. Readers should conduct their own research and consult with a professional advisor before making any investment decisions.