Bitwise Report: Crypto Fundamentals Are Getting Stronger Despite Third Straight Negative Quarter

Usage metrics tell a different story from price action, with adoption continuing to outpace market performance this cycle.

Bitwises Q2 2026 crypto market review shows its 10 Large Cap Crypto Index dropped 15.4% last quarter, the third straight quarter in the red and the longest such stretch since 2022.

However, the same report argued that even as prices fell, the crypto sector, including stablecoins, tokenized assets, and prediction markets, has been strengthening.

Crypto Prices Down, But Fundamentals Are Improving

According to Bitwise, eight of the index‘s 10 constituents finished Q2 in the red, with the worst performer in the basket being Cardano (ADA), which slipped nearly 40% in Q2 and is down more than 56% year to date. Ethereum and XRP lost 24.66% and 20.79% of their values, respectively, while Solana’s dip was more modest in comparison at 10.87%, although YTD it registered a more significant 40.61% plunge.

Bitcoin itself just suffered its worst June in four years after falling below $60,000 and was about 49% off its October 2025 all-time high of over $126,000 at the time of writing, stretching the downturn to about nine months.

But there were two assets in the Large Cap Crypto Index that bucked the downward trend: Hyperliquid (HYPE) and Stellar Lumens (XLM), with the former going up 79% and the latter over 10%. However, year-to-date XLM dumped 6.71% while HYPE still stayed green, surging by nearly 158%.

A separate report from CryptoQuant indicated that about 40% of altcoins are trading near their all-time lows, a share that climbed toward 45% when BTC broke below the aforementioned $60,000.

Per the Bitwise market review, on-chain activity, trading volume, and the total value locked (TVL) in DeFi also slipped. But it was not all doom and gloom, as prediction market volumes reached a record $43.2 billion during the quarter, which is almost 18 times higher than the year before.

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Meanwhile, tokenized real-world assets have gone up more than 50% so far this year to nearly $33 billion, and crypto-focused equities have also outperformed the wider digital asset market, with the Bitwise Crypto Innovators 30 Index gaining 30.6%.

The asset manager also noted that stablecoins settled 2.3 times more value than Visa and collectively hold more US Treasuries than the likes of Norway, India, Brazil, and Saudi Arabia. Further, it pointed out that revenue generation among crypto applications has become more concentrated, with Hyperliquid, PancakeSwap, and Aave each producing roughly $900 million over the past year.

A Market Twice the Size It Was at the Last Bottom

When Bitwise compared current activity levels to the same point in the 2022 cycle, the difference stood out away from the price charts. For instance, Ethereum transaction counts ran about 13 times higher, and DeFi TVL sits more than 60% above the level from that period. Additionally, stablecoin assets under management have doubled.

According to the report, only prices have failed to keep pace with the increasing usage and infrastructure, with the market now valuing crypto at levels associated with the last bear market, even though the industry is operating at almost twice the scale it had reached then, and there is greater liquidity and clearer participation from traditional finance firms.