Q4 2025 May Signal the Conclusion of the Crypto Bear Market: Insights from Bitwise

The fourth quarter of 2025 may have subtly indicated the end of the crypto bear market, according to a recent report by digital asset management firm Bitwise. This comes even as cryptocurrency prices struggled to reflect improving fundamentals.

Key Takeaways

Bitwise reports that Q4 2025 displayed strengthening fundamentals within the crypto sector, even amidst persistent price weaknesses.
Chief Investment Officer Matt Hougan sees similarities to early 2023, when subdued prices preceded a significant market rally.
Analysts are divided regarding the outlook for 2026, although on-chain activity and crypto revenues reached new highs.

In a report presented on Wednesday, Bitwise's Chief Investment Officer Matt Hougan noted that the final quarter of 2025 painted a perplexing scenario for investors. While cryptocurrency prices weakened for a considerable portion of the quarter, on-chain metrics, user activity, and revenue across the sector continued to improve.

Q4 2025 May Signal the Conclusion of the Crypto Bear Market: Insights from Bitwise

Hougan Draws Comparisons to the Market Post-FTX in Early 2023

Hougan likened the current market conditions to those observed in early 2023 when investors were still reeling from the fallout of the FTX collapse. During that period, cryptocurrency prices felt aimless despite indications of a recovery underneath. Bitcoin, for example, rebounded from lows near $16,000 and eventually soared to nearly $98,000 by the start of 2025.

“At that time, we were just starting to recover post-FTX, and the data was mixed; some indicators were improving, others were declining, and many stayed flat,” Hougan stated. “In the following two years, cryptocurrency prices skyrocketed.”

According to Hougan, a similar disconnect between market sentiment and fundamentals became evident again in late 2025. While asset prices declined, important indicators across the cryptocurrency landscape surged upward.

The projections for 2026, however, are still being hotly debated by analysts.

Tom Lee, head of research at Fundstrat, has cautioned that macroeconomic challenges, including trade tariffs and political instability, could put pressure on markets for much of the year before a late recovery occurs.

Conversely, VanEck predicts that the first quarter of 2026 will favor “risk-on” assets like cryptocurrencies, attributing this to improved fiscal clarity and signs of economic stabilization in the U.S.

Hougan shared four trends from Q4 that he believes support the argument for a market bottom.

Ethereum and layer-2 networks witnessed a surge in transaction volumes, reaching record highs and indicating growing real-world usage.

Simultaneously, revenues among crypto-focused companies surpassed those of many traditional sectors in the stock market.

Stablecoin Market Surges to Record $300B with Increased Transaction Volumes

Stablecoins played a pivotal role during this period, with transaction volumes and assets under management rising throughout 2025. The total market capitalization of stablecoins crossed $300 billion in Q4, achieving a new all-time high.

The adoption of decentralized finance (DeFi) also contributed to this trend. Hougan highlighted Uniswap, noting that the decentralized exchange now consistently handles more transaction volume than Coinbase.

“That type of divergence is often seen at the bottom of bear markets, where sentiment is low but fundamentals are strong,” he remarked.

Bitwise pointed out that several potential catalysts could drive crypto markets higher in 2026, including advancements related to the CLARITY Act, continued growth in stablecoins, a new appointment at the Federal Reserve, and major wirehouses providing client access to crypto exchange-traded funds.