Emre Yumlu 
Crypto markets struggled to gain momentum during the final quarter of 2025, with prices remaining under pressure across major assets. However, beneath the surface, on-chain data and sector-level indicators told a very different story. According to a recent assessment by crypto asset manager Bitwise, the fourth quarter may have displayed many of the classic signals associated with the end of a crypto bear market.
Matt Hougan, Chief Investment Officer at Bitwise, highlighted that Q4 presented a confusing mix of weak price action and strengthening fundamentals — a pattern that long-term crypto participants may find familiar.
Weak Price Action, Strengthening Foundations
Bitwise CIO Hougan argues that while market prices underperformed expectations in late 2025, the underlying health of the crypto ecosystem continued to improve. This divergence between price and fundamentals mirrors conditions seen in early 2023.
Following the collapse of FTX in 2022, Bitcoin was trading near the $16,000 level at the start of 2023. At that time, market data lacked a clear directional signal: some metrics improved, others stagnated, and sentiment remained fragile. Yet over the following two years, crypto markets staged a powerful recovery, with Bitcoin climbing to approximately $98,000 by early 2025.
According to Hougan, the current environment shows similar characteristics. Investor sentiment remains subdued and prices are compressed, but core metrics across the crypto economy are expanding. Historically, such disconnects have often emerged near cyclical lows rather than market tops.
No Consensus Yet on What 2026 Holds
Despite Bitwise cautiously optimistic tone, analysts remain divided on how 2026 may unfold for crypto markets.
Some market observers believe macroeconomic uncertainty, trade policy concerns, and geopolitical tensions could weigh on risk assets for much of the year. Political pressure in the United States, in particular, is seen as a potential headwind for equities and crypto alike.
Others, however, see reasons for optimism. This camp expects improving fiscal clarity and signs of economic stabilization in the US to support a more favorable environment for “risk-on” assets, especially during the early months of 2026.
Four Indicators Supporting a Bullish Long-Term Outlook
Hougan points to four major trends from the final quarter of 2025 that underpin Bitwise constructive outlook for the year ahead.
1. Record Activity on Ethereum and Layer-2 Networks
Transaction volumes on Ethereum and its Layer-2 scaling solutions have surged to all-time highs. This growth suggests that real usage and demand continue to expand independently of short-term price movements, reinforcing the network’s long-term value proposition.
2. Crypto Firms Outpacing Traditional Sectors on Revenue
According to Hougan, revenues generated by crypto-native companies are growing faster than those in many traditional equity market sectors. This trend reinforces the idea that crypto has evolved beyond pure speculation and is increasingly supported by sustainable business models.
3. Stablecoin Market Reaches New Milestones
The stablecoin sector recorded a standout performance in Q4 2025. Total market capitalization surpassed $300 billion for the first time, setting a new historical high. Transaction volumes and assets under management also expanded significantly, underscoring stablecoins’ growing role in global digital finance.
4. Accelerating Adoption in Decentralized Finance
Decentralized finance continues to gain traction, particularly in trading activity. Platforms such as Uniswap have reached a scale where they consistently rival — and at times exceed — centralized exchanges in transaction volume. Hougan notes that Uniswap now reliably processes more volume than Coinbase, highlighting the maturity of DeFi infrastructure.
A Classic Bear Market Signal: Sentiment vs. Reality
Hougan emphasizes that the gap between negative market sentiment and improving fundamentals is not unusual at major turning points. Periods marked by investor pessimism, compressed prices, and rapid infrastructure growth have historically preceded longer-term trend reversals in crypto markets.
While short-term volatility may persist, the broader data suggests the ecosystem is strengthening rather than contracting.
Potential Catalysts That Could Shape 2026
Beyond current fundamentals, Bitwise identifies several developments that could act as catalysts for crypto markets in 2026:
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Progress on the CLARITY Act, which could provide greater regulatory transparency in the US
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The emergence of a new stablecoin-driven growth cycle
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A potential leadership change at the US Federal Reserve
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Three major wirehouse firms opening broader client access to crypto exchange-traded funds (ETFs)
Each of these factors could meaningfully influence capital flows and investor confidence in the coming year.
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