Bitwise Asset Management is arguing that crypto\u2019s current drawdown has the fingerprints of a cyclical low: weak prices alongside strengthening on-chain and business fundamentals, a pattern the firm says last appeared in Q1 2023 before a multi-year rally.<\/p>\n
In its Q4 2025 \u201cCrypto Market Review,\u201d Bitwise Chief Investment Officer Matt Hougan frames the quarter as an unusually important inflection point precisely because the signals are not all moving in the same direction. \u201cBut sometimes\u2014every once in a while\u2014the charts are mixed,\u201d Hougan wrote. \u201cThe last one I remember was Q1 2023. At the time, we were starting to rebound post-FTX, and the data was topsy-turvy; some up, some down, some sideways. In the two years that followed, crypto prices soared.\u201d<\/p>\n
Bitwise\u2019s core claim<\/a> rests on a divergence between market performance and usage metrics in Q4. The firm notes that Ethereum fell 29% over the quarter, even as Ethereum and Layer 2 transactions \u201csoared to new all-time highs (up 24.5%).\u201d Crypto equities also sold off, down 20% in Q4 by Bitwise\u2019s measure while the underlying companies\u2019 revenues were \u201con pace to grow 3x faster than any other sector of the stock market,\u201d according to the report.<\/p>\n The price tape was undeniably heavy. The Bitwise 10 Large Cap Crypto Index fell 26.29% in Q4 and finished 2025 down 10.64% year-to-date; Bitcoin was down 23.48% in Q4 (down 6.26% in 2025), while Ethereum fell 28.59% in Q4 (down 11.03% in 2025).<\/p>\n Yet the report also shows the market retaining scale: total crypto market capitalization stood at roughly $2.78 trillion as of Dec. 31, with bitcoin representing 63.6% and ether about 12.9%.<\/p>\n Where Bitwise sees \u201cgreen shoots\u201d is in rails and revenue. The executive summary argues that \u201cboth stablecoin AUM and stablecoin transaction activity soared to new all-time highs,\u201d presenting that as evidence a durable adoption wave is underway.<\/p>\n Bitwise argues the market\u2019s next leg will be shaped less by narrative rotation and more by identifiable catalysts, starting with US market-structure legislation. \u201cAll eyes are on the CLARITY Act<\/a>,\u201d the report says, describing it as a Senate-moving bill that could provide a \u201cstrong regulatory foundation\u201d but also carries the risk of a weaker outcome or no bill at all.<\/p>\n The second catalyst is what the firm calls a \u201cstablecoin supercycle,\u201d positioning stablecoins as payment infrastructure that is increasingly decoupled from directional crypto beta. Bitwise writes that 2025 annual stablecoin transaction volume topped $32 trillion, up 73% year-over-year, \u201cmore than doubling Visa\u2019s volume through the first nine months of the year,\u201d and says that data \u201cconfirm[s] their arrival in the mainstream.\u201d<\/p>\n The third is macro, specifically the coming change at the Federal Reserve. Bitwise notes Chair Jerome Powell\u2019s \u201clooming departure in May<\/a>,\u201d giving President Trump an opportunity to appoint new leadership. Between named candidates Kevin Warsh and Kevin Hassett<\/a>, Bitwise says Hassett is viewed as the more dovish on rates and fiscal policy, adding that a dovish appointment would increase the likelihood of rate cuts and \u201cshould drive crypto assets higher.\u201d<\/p>\nFour Crypto Catalysts Bitwise Is Watching In 2026<\/h2>\n