Bitwise Asset Administration is arguing that crypto’s present drawdown has the fingerprints of a cyclical low: weak costs alongside strengthening on-chain and enterprise fundamentals, a sample the agency says final appeared in Q1 2023 earlier than a multi-year rally.
In its This autumn 2025 “Crypto Market Evaluation,” Bitwise Chief Funding Officer Matt Hougan frames the quarter as an unusually essential inflection level exactly as a result of the indicators usually are not all transferring in the identical route. “However generally—each every now and then—the charts are blended,” Hougan wrote. “The final one I bear in mind was Q1 2023. On the time, we have been beginning to rebound post-FTX, and the info was topsy-turvy; some up, some down, some sideways. Within the two years that adopted, crypto costs soared.”
Bitwise’s core declare rests on a divergence between market efficiency and utilization metrics in This autumn. The agency notes that Ethereum fell 29% over the quarter, at the same time as Ethereum and Layer 2 transactions “soared to new all-time highs (up 24.5%).” Crypto equities additionally offered off, down 20% in This autumn by Bitwise’s measure whereas the underlying corporations’ revenues have been “on tempo to develop 3x sooner than every other sector of the inventory market,” based on the report.
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The value tape was undeniably heavy. The Bitwise 10 Giant Cap Crypto Index fell 26.29% in This autumn and completed 2025 down 10.64% year-to-date; Bitcoin was down 23.48% in This autumn (down 6.26% in 2025), whereas Ethereum fell 28.59% in This autumn (down 11.03% in 2025).
But the report additionally exhibits the market retaining scale: whole crypto market capitalization stood at roughly $2.78 trillion as of Dec. 31, with bitcoin representing 63.6% and ether about 12.9%.
The place Bitwise sees “inexperienced shoots” is in rails and income. The manager abstract argues that “each stablecoin AUM and stablecoin transaction exercise soared to new all-time highs,” presenting that as proof a sturdy adoption wave is underway.
4 Crypto Catalysts Bitwise Is Watching In 2026
Bitwise argues the market’s subsequent leg can be formed much less by narrative rotation and extra by identifiable catalysts, beginning with US market-structure laws. “All eyes are on the CLARITY Act,” the report says, describing it as a Senate-moving invoice that might present a “sturdy regulatory basis” but in addition carries the chance of a weaker end result or no invoice in any respect.
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The second catalyst is what the agency calls a “stablecoin supercycle,” positioning stablecoins as cost infrastructure that’s more and more decoupled from directional crypto beta. Bitwise writes that 2025 annual stablecoin transaction quantity topped $32 trillion, up 73% year-over-year, “greater than doubling Visa’s quantity by way of the primary 9 months of the yr,” and says that knowledge “verify[s] their arrival within the mainstream.”
The third is macro, particularly the approaching change on the Federal Reserve. Bitwise notes Chair Jerome Powell’s “looming departure in Might,” giving President Trump a chance to nominate new management. Between named candidates Kevin Warsh and Kevin Hassett, Bitwise says Hassett is considered because the extra dovish on charges and financial coverage, including {that a} dovish appointment would enhance the probability of fee cuts and “ought to drive crypto property larger.”
The fourth is plumbing: distribution at main US wealth platforms. Bitwise factors to “preliminary wirehouse ETF flows” following This autumn approvals, writing that monetary advisors at three of the 4 main wirehouses gained entry to crypto ETFs in This autumn after beforehand being barred from recommending publicity. These advisors “management ~$16 trillion in property,” and Bitwise expects early flows to begin slowly in Q1 earlier than accelerating.
Hougan stops wanting calling any single variable decisive, however ties the underside thesis as to whether the underlying knowledge retains bettering. He wrote he was drafting the memo on Jan. 16 after crypto had already begun posting sturdy early-year returns and added: “If the basic knowledge on this report stays regular, I feel that pattern might proceed.”
At press time, the whole crypto market cap stood at $3.00 trillion.
Featured picture created with DALL.E, chart from TradingView.com
