Bitwise’s view on the final months of 2025 reads more like a cautious and hopeful note than a clamorous market rally. Chain momentum has picked up even as prices have stalled, and this is the gap that traders are talking about. Some people think this is rock bottom. Others say it’s too early to be sure.
Crypto: An enhance in on-chain activity
According to Bitwise Ether Layer 2 activity and transactions have reached fresh highs, and decentralized trading has increased significantly. Stablecoin shipments also increased, with total market capitalization surpassing the $300 billion mark in the fourth quarter.
Reports show that the volumes of decentralized exchanges sometimes equaled or exceeded the volumes of major centralized exchange systems. These are tough numbers. These are signs that real utilization and liquidity are expanding beneath the surface.
The latest Bitwise Crypto Market Review has just been released – and it is the most vital review we have ever published.
Why? Because it shows the stress in cryptocurrency markets, which has signaled bear markets in the past (see Q1 2023).
Impacts: In the fourth quarter of 2025…
– ETH price dropped by 29% ……
— Bitwise (@BitwiseInvest) January 21, 2026
Why prices have dropped
Bitwise Chief Investment Officer Matt Hougan compared this setup to early 2023, when prices followed rising fundamentals before making a significant recovery in the following two years.
The comparison makes sense on paper. Price can be stubborn. Market psychology often lags behind the realities of the transaction chain, and investors sometimes wait for a clearer picture of the macro situation before investing capital.
Fundstrat’s Tom Lee offers a counterpoint, arguing that it could happen this year nodular overdue, with tariffs and political tensions dampening risk appetite. This view makes many investors remain cautious.
Crypto, stablecoins and DeFi at the center
According to market data, the flow into stablecoins has accelerated and the flow of funds into them has accelerated crypto companies have overtaken several other sectors on the stock exchange. DeFi employ was no longer a niche indicator; this was crucial to the narrative of the fourth quarter.
“It’s the kind of divergence you see at the bottom of bear markets, when sentiment is weaker but fundamentals are high,” Hougan said.
Some infrastructure companies reported rising revenues. At the same time, trading volumes remained subdued compared to previously seen peaks, which helps explain the mismatch between on-chain strength and sideways price action.
Why it might matter in 2026
Bitwise highlighted 10 broad metrics it considers signs of market health, ranging from transaction volume to custody and fee trends. There has also been progress in regulatory transparency.
Reports show that Transparency Act could change the treatment of stablecoins in the US, and the fresh chairman of the US Federal Reserve could change policy in ways that are material for risky assets.
Bitwise sees the fourth quarter as a silent period where things were improving behind the scenes, even if prices didn’t show it. The company says this kind of price-activity gap occurred before the huge bounces. This doesn’t mean the rally will happen immediately, but the market may be preparing for a better year.
Featured image from Unsplash, chart from TradingView