Bitwise Investments said the fourth quarter of 2025 delivered a mixed signal: weak price action alongside strengthening fundamentals, a combination the firm argued could mark a turning point for the crypto bear market.
Bitwise highlighted several concrete data points showing technical and commercial growth despite falling prices. Ethereum and layer‑2 networks reached record daily transactions, with late‑December 2025 activity cited at about 2.23 million daily transactions and quarterly smart‑contract deployments totaling roughly 8.7 million.
Crypto‑native firms, the report noted, grew revenues at a pace the firm described as roughly three times faster than many traditional peers.
On Bitcoin, Bitwise acknowledged price weakness — a ~23.5% drop in Q4 and ~6.3% decline for the year — but emphasized continued network use, including more than 7.7 million Ordinals minted over the period.
The firm argued this divergence between price and usage supports the idea that fundamentals had begun to strengthen even as markets discounted further downside.
Market liquidity, stablecoins and systemic view
Stablecoins and transaction volumes were central to Bitwise’s view of underlying strength. The report said stablecoin market capitalization surpassed $300 billion in Q4, with some estimates near $311 billion. Transaction volumes on Ethereum in the quarter exceeded $8 trillion, and on a full‑year basis the report cited about $33 trillion, underscoring broad liquidity flow through decentralized rails.
Bitwise framed the broader market cap — roughly $3 trillion, down about 10.4% for the year — as a headline that underrepresents structural improvements in protocol usage, revenues and decentralized finance adoption.
Looking into 2026, Bitwise listed several potential catalysts that it said could push markets higher. Matt Hougan summarized the firm’s view succinctly: “the fourth quarter of 2025 delivered mixed signals and may have marked a bottom for the crypto bear market,” placing that posture against a set of forward events.
Analysts remain divided: some expect a challenging year before a late‑2026 rebound, while others forecast an earlier rally if fiscal and regulatory clarity accelerates.
Investors will now watch how those catalysts unfold and whether the divergence Bitwise highlighted — rising on‑chain use and revenues amid weak prices — converts into sustained capital inflows. The coming quarters, particularly regulatory moves and institutional distribution of ETFs, will serve as the practical test of whether Q4 2025 represented a durable low.
