The fourth quarter of 2025 may have quietly signaled the end of the crypto bear market, according to a new report from digital asset manager Bitwise, even as prices struggled to reflect improving fundamentals.
Key Takeaways:
- Bitwise says Q4 2025 showed strengthening crypto fundamentals despite continued price weakness.
- Hougan sees parallels with early 2023, when muted prices preceded a major market rally.
- Analysts remain split on 2026, even as on-chain activity and crypto revenues hit new highs.
In a report shared Wednesday, Bitwise chief investment officer Matt Hougan said Q4 presented a confusing picture for investors.
Crypto prices weakened through much of the quarter, yet on-chain data, user activity, and revenue metrics across the sector continued to strengthen.
Bitwise’s Hougan Draws Parallels Between Today’s Market and Post-FTX 2023
Hougan compared the current setup to early 2023, when markets were still reeling from the collapse of FTX.
At the time, crypto prices appeared directionless despite signs of recovery under the surface. Bitcoin rebounded from lows near $16,000 and ultimately surged to around $98,000 by the start of 2025.
“At the time, we were starting to rebound post-FTX, and the data was topsy-turvy; some up, some down, some sideways,” Hougan said. “In the two years that followed, crypto prices soared.”
According to Hougan, the same divergence between sentiment and fundamentals emerged again in late 2025. While asset prices pulled back, key indicators across the crypto economy moved sharply higher.
The outlook for 2026, however, remains a point of debate among analysts.
Fundstrat head of research Tom Lee has warned that macro headwinds, including trade tariffs and political uncertainty, could weigh on markets for much of the year before a late rebound.
By contrast, VanEck expects the first quarter of 2026 to favor “risk-on” assets such as crypto, citing greater fiscal clarity and signs of stabilization in the U.S. economy.
Hougan highlighted four trends from Q4 that he believes strengthen the case for a market bottom.
Ethereum and layer-2 networks saw transaction volumes climb to record levels, suggesting growing real-world usage.
At the same time, revenues among crypto-focused companies outpaced many traditional sectors in the stock market.
Stablecoin Market Hits Record $300B as Transaction Volumes Surge
Stablecoins also played a central role. Transaction volumes and assets under management surged throughout 2025, with total stablecoin market capitalization surpassing $300 billion in Q4, marking a new all-time high.
Decentralized finance adoption rounded out the list. Hougan pointed to Uniswap, noting that the decentralized exchange now consistently processes more transaction volume than Coinbase.
“That’s the kind of divergence you get at the bottom of bear markets, when sentiment is down but fundamentals are up,” he said.
Bitwise added that several potential catalysts could push crypto markets higher in 2026, including progress on the CLARITY Act, continued growth in stablecoins, a new Federal Reserve chair appointment, and major wirehouses opening client access to crypto exchange-traded funds.
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