Quick Breakdown
- Bitwise Asset Management reports that Q4 2025 likely marked a bear market bottom due to a sharp divergence between falling prices and rising network fundamentals.
- Ethereum transaction volumes reached all-time highs during the quarter despite a 29% price decline, while crypto equity revenues grew three times faster than other sectors.
- Historical data suggests that similar “high-contrast” periods, such as Q1 2023, have preceded two-year rallies, signalling a potential bullish reversal for the blockchain industry.
The crypto asset manager Bitwise has identified the fourth quarter of 2025 as a potential “bear market bottom,” citing a historic tension between bearish sentiment and robust on-chain growth. In its latest quarterly review released January 21, 2026, Bitwise noted that while major assets like $ETH (Ethereum) saw significant price drawdowns, actual network utility surged to record levels. The report emphasizes that this specific type of divergence where “sentiment is down but fundamentals are up” has historically served as a precursor to significant market recoveries.
The latest Bitwise Crypto Market Review just dropped—and it’s the most important one we’ve ever published.
Why? Because it shows a tension in crypto markets that has historically signaled a bear-market bottom (see Q1 2023).
Receipts: During Q4 2025…
– ETH’s price fell 29% ……
— Bitwise (@BitwiseInvest) January 21, 2026
Mixed signals point to a cycle reset
According to Bitwise’s findings, the market was flooded with mixed signals that flushed out speculative excess while reinforcing the industry’s core infrastructure. During Q4 2025, Ethereum transactions hit new all-time highs even as the $ETH price fell by 29%. Furthermore, crypto-linked equities saw a 20% valuation drop despite corporate revenues in the sector growing faster than those of any other global industry. This period of “deep capitulation” and washed-out sentiment aligned with a massive spike in stablecoin activity.
Future outlook for 2026
Looking ahead, Bitwise predicts that 2026 will “belong to the bulls,” driven by accelerating ETF demand and potential regulatory clarity in the United States. The firm expects that institutional inflows could eventually purchase more than 100% of the new supply of $BTC (Bitcoin), $ETH, and $SOL (Solana). While macro risks remain, the convergence of on-chain support levels and attractive valuations suggests the “coiled spring” for the next expansion is already in place.
Meanwhile, Hong Kong is making a strategic push to become a global digital asset hub, with plans to launch its first stablecoin licensing framework in early 2026. This initiative aims to modernize the financial infrastructure by integrating these regulated tokens with existing crypto exchanges and tokenization projects. The government stresses its commitment to a responsible, sustainable regulatory approach to safeguard consumers. However, the move has also raised significant industry concerns that stricter regulations could negatively affect asset managers.
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