The cryptocurrency market extended its losses in the second quarter of 2026, marking three consecutive quarters of negative returns for the first time since the 2022 bear market, according to Bitwise’s latest market review.
The firm’s Bitwise 10 Large Cap Crypto Index fell 15.4% during the quarter, with eight of its 10 constituent assets ending in negative territory. The report also showed weaker onchain activity, lower trading volumes and a decline in assets locked across decentralized finance (DeFi) protocols, showing a slowdown across the digital asset market.
Q2 was a tough quarter for crypto assets, but it was a great quarter for crypto adoption:
– Crypto equities held up, with the Bitwise Crypto Innovators 30 Index rising 30.6%
– Crypto apps are in their revenue era: Hyperliquid and Aave each generated ~$900M in revenue over the… pic.twitter.com/jFbDTWZAX7
— Bitwise (@Bitwise) July 9, 2026
Why did crypto prices continue to fall?
Bitwise described the second quarter as a difficult period for the crypto industry, with declining prices extending the market’s losing streak to three straight quarters.
The report said cryptocurrencies became more closely tied to traditional financial markets during the period as their correlation with stocks increased. That made digital assets more vulnerable to broader risk-off sentiment across global markets.
Institutional demand also weakened with Spot Bitcoin exchange-traded funds (ETFs) recording their largest quarterly net outflows since launching in the United States, adding further selling pressure.
Despite the weak quarter, Bitwise noted that ETF demand has remained volatile throughout the current market cycle. By May 2026, spot Bitcoin ETFs had attracted more than $3.4 billion over seven consecutive weeks of net inflows, showing that investor appetite has shifted several times.
ALSO READ: Extreme Crypto Market Fear Signals Imminent Inflection Point, Matrixport Analysts Say
Stablecoins and tokenized assets continue expanding
While crypto prices struggled, other parts of the digital asset industry continued to grow.
Bitwise reported that stablecoin settlement volume reached 2.3 times the volume processed by Visa. Stablecoin issuers also now hold more U.S. Treasury securities than most countries.
The report follows earlier industry data showing adjusted stablecoin transaction volume reached $10.9 trillion in 2025, while total settlement volume climbed to $33 trillion under broader measurements. Visa has also expanded its blockchain payment efforts, with its stablecoin settlement run rate reaching about $7 billion as of March 2026.
Tokenized real-world assets also continued gaining traction. According to Bitwise, the sector grew 50.3% during the first half of 2026 to reach $32.89 billion. The market includes tokenized government bonds, private credit and investment funds as institutional adoption continues to increase.
Can strong blockchain activity support a recovery?
Despite weaker prices, Bitwise said blockchain activity remains well above levels seen during the 2022 market bottom.
Ethereum transaction activity has increased roughly 13-fold since then, while DeFi total value locked has grown by more than 60%. Stablecoin assets under management have also nearly doubled compared with the previous market low.
The report also highlighted strength across several crypto sectors. Prediction market trading volume reached a record $43.2 billion during the quarter, nearly 18 times higher than a year earlier.
Crypto-related equities also outperformed digital assets. The Bitwise Crypto Innovators 30 Index gained 30.6% in Q2, even as the firm’s large-cap crypto index posted a double-digit decline.
Meanwhile, Hyperliquid, PancakeSwap and Aave each generated about $900 million in annual revenue, reflecting continued demand for decentralized trading, lending and derivatives platforms.
Bitwise said the crypto industry is now roughly twice the size it was at the bottom of the 2022 market cycle. However, stronger network activity and rising institutional participation may not be enough to prevent further short-term price weakness.
Enjoyed this? Bookmark DeFi Planet, explore related topics, and follow us on Twitter, LinkedIn, Facebook, Instagram, Threads and CoinMarketCap Community for seamless access to high-quality industry insights
Take control of your crypto portfolio with DEFI PLANET PRO, DeFi Planet’s suite of analytics
