The fourth quarter of 2025 has emerged as a pivotal moment for the cryptocurrency market, with Bitwise highlighting potential signs of recovery in 2026. Despite a lackluster performance in Q4, the report underscores robust underlying fundamentals that could pave the way for a market rebound. Matt Hougan, the chief investment officer at Bitwise, noted that the current market conditions resemble the early 2023 recovery following the FTX collapse.
In Bitwise”s analysis, Q4 2025 presented a mixed bag for crypto assets. While overall market prices struggled, fundamental indicators remained strong. There was notable growth in specific sectors, particularly in Ethereum and layer-2 transactions, echoing the resilience seen in early 2023 when Bitcoin made a significant comeback. Hougan described the data from Q4 as “topsy-turvy,” with some sectors thriving while others faced stagnation. He emphasized that these mixed signals are indicative of the bottoming phase of a bear market, suggesting that solid fundamentals could lead to recovery in the near future.
Positive Growth Indicators for 2026
Bitwise has pinpointed several key trends in Q4 2025 that may serve as catalysts for crypto market growth in 2026. Notably, both Ethereum and layer-2 transactions achieved new all-time highs, reflecting an increasing demand for decentralized applications. Furthermore, the report revealed that crypto-native companies outperformed many traditional sectors in terms of revenue growth. Stablecoin transactions surged, pushing their market capitalization beyond $300 billion, indicating a rising interest in fiat-pegged digital assets. The report also noted a robust uptake of decentralized finance (DeFi), particularly through decentralized exchanges like Uniswap. These developments suggest that the crypto market remains resilient, even in the face of temporary price fluctuations.
Despite a 29% drop in Ethereum“s price during this period, transaction volumes reached record levels. Similarly, crypto equities saw a 20% decline, yet revenues for crypto companies grew at a rate three times faster than that of other sectors. This pattern of weak sentiment coupled with strong fundamentals is characteristic of the latter stages of bear markets.
Diverse Predictions for 2026
Looking ahead to 2026, analysts offer differing perspectives on the crypto landscape. Tom Lee from Fundstrat foresees potential challenges throughout the year, citing political tensions and tariffs as significant hurdles for growth in the initial months. However, Lee anticipates a market recovery as the year progresses. Conversely, VanEck is optimistic about the first quarter of 2026, attributing this to clearer U.S. fiscal policies that could bolster risk-on assets like cryptocurrencies.
Bitwise also identified several factors that could enhance market growth, including advancements related to the CLARITY Act and the anticipated launch of crypto exchange-traded funds (ETFs). These developments may provide the necessary momentum for a market resurgence in 2026, reinforcing the potential for a more favorable outlook as the year unfolds.
