Bitwise Q2 Report: The market is generally falling but fundamentals are strong, with RWA reaching $33 billion

Source: Bitwise Investments

Author: Ryan Rasmussen

Original title: The Five Most Important Crypto Charts From Q2

According to the report, the Bitwise Top 10 Market Capitalization Cryptocurrency Index fell 15.4%, with 8 of its 10 constituent stocks recording negative returns; spot Bitcoin ETF outflows of $4.9 billion, the worst quarterly performance on record; on-chain trading activity, trading volume, and DeFi assets all declined, while the correlation between cryptocurrencies and stocks increased.

Of course, there are bright spots in the market. It is predicted that the market's open contracts reached a record high of $1.8 billion, with quarterly trading volume of $43 billion; tokenized real assets reached $33 billion in the second quarter, up 45% from the beginning of the year; crypto stocks also performed well; the Bitwise Crypto Innovators 30 Index rose 30.6%, mainly due to AI-related Bitcoin mining companies.

“Overall, the situation is grim. To make matters worse, this sense of hardship is just as real. Although there are no statistics to measure the “vibe,” the current climate in the crypto industry is one of the worst I've seen in my eight years in the business. One reason: This is our third consecutive quarter of negative returns and the longest continuous decline cycle since 2022 (four consecutive quarters of negative returns at the time).” Matt Hougan, chief investment officer at Bitwise, wrote.

Here are some key data charts excerpted from the report, Enjoy~

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Q2 Top Ten Key Events

In the second quarter, we saw that Strategy, which claims to “never sell,” sold Bitcoin, first through a small test, and finally sold $218 million in Bitcoin at the end of June to pay dividends.

Affected by related coin sales movements, Bitcoin fell below $60,000 in June, the lowest price since 2024. Compared with a 52% drop from its peak of $126,080 (last October), the crypto winter has continued for 9 months. Meanwhile, spot Bitcoin ETFs had an outflow of $4.9 billion in the second quarter, the biggest quarterly net outflow since launch.

On the policy side, the “CLARITY Act,” which has always received much attention, is not progressing smoothly in the Senate. Due to an impasse over ethics and enforcement provisions, the market's probability of passing it by 2026 has also dropped to 40%.

Here are the top ten cryptographic events for Q2 as summarized by Bitwise:

Q3 Quarterly Outlook

The third quarter was critical to the success or failure of the CLARITY Act. The market structure bill passed the Senate Banking Committee in the second quarter, but stalled due to moral provisions relating to the president's family's crypto interests. The forecast market shows that its probability of passing in 2026 is close to 40%, down from 75% in mid-May, and we don't think it's likely to pass before the November midterm elections. However, laws with such probabilities often pass, so we think CLARITY still has a chance. If the bill passes, we believe it may mark the bottom of this bear market; if it fails, fluctuations are expected in the short term, and uncertainty will gradually dissipate as the industry continues to advance under the SEC and CFTC, which support cryptography.

Stablecoin expansion after the GENIUS Act. July marks the final sprint before the GENIUS Act comes into effect in January 2027, and regulators are required to finalize the final rules in the third quarter. We expect a large number of large companies to announce stablecoin projects before the official launch, such as the recently announced OpenUSD supported by Stripe, BlackRock, Visa, Coinbase, and about 140 other companies. The stablecoin supply has remained at nearly $300 billion since the fall of last year, showing resilience in the crypto market sell-off. We believe that as the January effective date approaches, the acceleration in stablecoin growth will be a catalyst for public chains such as Ethereum and Solana in the third quarter.

The US Federal Reserve led by Walsh. The Federal Reserve has welcomed a new chairman, Kevin Walsh, and the market knows very little about his governing style. The third quarter will release its first signals: the FOMC meeting in July and the Federal Reserve's annual meeting in Jackson Hole in late August. As of now, Walsh has kept interest rates unchanged and has hinted that he is in no hurry to cut interest rates. By the end of the quarter, we should be able to understand the Fed's movements more clearly than we do now. It is too early to judge the trend of interest rates, but the Federal Reserve sets the tone for all risky assets, and any outcome will be quickly digested by the market.

A quiet revaluation of DeFi. Over the past month, Bitcoin has declined by around 22%, while Bitwise's DeFi index is down just 4%. DeFi is generally much more volatile than Bitcoin, so it's rare that it's resistant to falling, and hardly anyone is paying attention to it. We think DeFi is quietly being revalued: the token economy is improving, the gap between usage and token value is narrowing, real institutions are being built on protocols such as Morpho and Jupiter, and Aave alone has generated around $900 million in revenue in the past year. We expect DeFi's excellent performance to continue in the third quarter, and this shift is often detected by market delays.

Trends in crypto stocks and crypto assets diverge sharply

Halfway through 2026, the price of crypto assets fell 36%. Among the other major asset classes, the only one that recorded a decline was gold, which declined by 7%, while the rest rose. This is one reason why this crypto winter is so difficult — it's a lonely winter.

Notably, however, crypto stocks had a 23% return in the first half of the year, outperforming all major asset classes except emerging market stocks. In fact, the Bitwise Crypto Innovators 30 Index, which tracks the 30 largest listed crypto economy companies, returns more than double that of US stocks.

This shows that even in a bear market, investment opportunities in the crypto sector continue to emerge. Bitcoin mining companies are benefiting from the smooth wind brought by AI; stablecoin issuers and tokenization platforms are riding the wave of Wall Street adoption; traditional finance is increasingly closely linked to the crypto world. Although I expect crypto assets to rebound in the second half of the year, the first half of the year strengthened an important understanding: crypto is not a single thing, but a diverse and dynamic field, and should be examined from a broader perspective.

The performance of cryptocurrencies and major asset classes is as follows:

The data is from Bloomberg. Data as of June 30, 2026

Crypto apps generate significant revenue

Over the past 12 months, the top ten crypto apps have collectively generated $5.9 billion in revenue. The top three (PancakeSwap, Hyperliquid, and Aave) each earned close to $1 billion. These are all well-functioning businesses that earn fees from trading, borrowing, and staking — and bear markets are no exception.

The top ten crypto apps ranked by revenue, as shown below:

Data from Token Terminal from January 1, 2025 to June 30, 2026

(1) Revenue is comprised of total fees paid by users; (2) Hyperliquid revenue does not include HyperEVM fees

Real World Asset (RWA) Bull Market

US Treasury Secretary Scott Bessent himself stated just a few weeks ago: “Digital assets, stablecoins, tokenization, and new payment systems will help shape the future of money.”

In a sense, the future he described has arrived. Tokenized real world assets (RWA) reached a record $33 billion in the second quarter, growing 12% in the quarter and up 45% year to date, with tokenized US Treasury bonds, corporate credit, stocks, and venture capital growing particularly rapidly.

When I saw this chart, I saw that the world's largest asset management company was moving assets to the chain on a large scale at full speed, which is worth watching.

The size of tokenized real-world assets (RWA) is shown below:

Data from RWA.xyz from January 1, 2020 to June 30, 2026

Note: The image above omits stablecoin issuers such as Circle and Tether

Anticipate continued market expansion

The second-quarter forecast market's open contracts reached a record high of $1.8 billion, with sports being the most weighted sector. The quarterly transaction volume also set a record, reaching $43 billion.

Apps such as Polymarket reflect the hidden nature of cryptocurrency adoption by retail users: millions of people are using cryptographic infrastructure to trade real-world event outcomes, yet most of them don't know or care that crypto provides the underlying technology.

As the US midterm elections approach, it is predicted that the market's trading volume and open positions will hit record highs several times this year. After all, politics is the category that brought the prediction market into the public eye in 2024, and the market has tripled in size since then.

Predict open market contracts, as follows:

Data from Blockworks Research from January 1, 2023 to June 30, 2026

Crypto stocks are less correlated with major assets

Back to crypto stocks, one of the most interesting charts is the 90-day rolling correlation of the Bitwise Crypto Innovators 30 Index with other major asset classes. Notably, compared to US stocks, the index is less correlated to almost every other category: including developed market stocks, emerging market stocks, US REITs, US bonds, and gold. (The only exception is commodities, where the correlation between the two is negative.)

In other words: in the first half of 2026, crypto stocks returned more than twice as much as US stocks, while being less correlated with almost every other asset in the portfolio. This return and decentralized nature is enough to make investors excited.

The correlation between some assets and asset classes (90 day rolling) is shown below:

Data from Bloomberg as of June 30, 2026

Concluding remarks

As you go through these pages, take a close look at the charts. Almost all indicators — price, on-chain activity, trading volume — are far from their respective historical highs. This is not surprising considering that prices have dropped by more than 50% from their peak in October last year.

But if you compare the same data to the bottom of the previous bear market — 2022 — the picture is quite different. Ethereum transaction activity increased approximately 13 times compared to the second quarter of 2022. The value of DeFi hedging increased by more than 60%. Stablecoins have almost doubled in size. The only thing that really hasn't kept up with the pace seems to be the price.

I think this reflects exactly where we are now: the market is pricing an industry that is already twice the size of the bottom of the previous cycle at bear prices — an industry with deeper liquidity and more solid fundamentals, and Wall Street is finally on the chain.

This kind of foundation can't stop the cold winter, but it determines what grows in spring.

That's my interpretation of this quarter. Of course, these 50+ charts don't answer the question we've been asked the most recently: “Has the price of crypto bottomed out?” But they do point to the tenacious fundamentals of the crypto sector — a space where usage, revenue, and adoption rates continue to grow in a bear market.

For me, this is an area of interest — and the foundation on which the next cycle will be built.

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