Crypto Bear Market Bottom: Bitwise Reveals Q4 2025 Signals Mirroring Historic 2023 Rebound

San Francisco, December 2025 – The cryptocurrency sector may have finally reached a pivotal turning point after a prolonged downturn, according to a comprehensive new analysis from leading digital asset manager Bitwise. The firm’s fourth-quarter report, released this week, presents compelling evidence that the crypto bear market has potentially bottomed, drawing direct parallels to the market conditions that preceded the historic rally from early 2023 through 2025. This analysis arrives at a critical juncture, offering investors and analysts a data-rich framework to understand the current divergence between weak prices and robust underlying network activity.

Crypto Bear Market Bottom: Decoding Bitwise’s Q4 2025 Signals

Bitwise Chief Investment Officer Matt Hougan authored the report, which meticulously details the “mixed signals” that characterized the final quarter of 2025. He notes that while cryptocurrency prices performed poorly overall, the fundamental metrics across major blockchains and applications showed exceptional strength. This divergence, Hougan argues, is a classic hallmark of market bottoms, where investor sentiment lags behind tangible on-chain growth and adoption. The report specifically recalls the first quarter of 2023, a period following the FTX collapse when Bitcoin traded near $16,000. Despite widespread pessimism then, fundamental improvements laid the groundwork for a multi-year bull run that saw Bitcoin approach $100,000 by 2025’s start.

“We are witnessing a similar setup today,” Hougan stated. “The data is topsy-turvy, with strong growth on fundamental statistics coinciding with major price pullbacks. Historically, this kind of divergence creates powerful investment opportunities.” The report emphasizes that this pattern is not merely anecdotal but is supported by quantifiable data across several key verticals within the digital asset ecosystem, suggesting the weakness may be confined to price action alone.

Four Pillars of Fundamental Strength in Q4 2025

The Bitwise analysis identifies four critical trends that underpin its optimistic reading of the Q4 data, serving as concrete evidence of health beneath the surface price volatility.

• Ethereum and Layer-2 Network Activity: Transactions on the Ethereum network and its associated Layer-2 scaling solutions, such as Arbitrum and Optimism, soared to all-time highs in Q4 2025. This surge indicates robust user adoption and utility, moving beyond speculative trading to actual use cases like decentralized finance (DeFi) and non-fungible tokens (NFTs).
• Crypto Company Revenue Growth: Publicly traded companies focused on cryptocurrency and blockchain technology reportedly outpaced other sectors in revenue growth. This metric suggests the industry’s infrastructure and service providers are achieving commercial success and scaling effectively, irrespective of token prices.
• Stablecoin Adoption and Market Cap: The stablecoin sector had a remarkably strong year, culminating in Q4 2025 with the total market capitalization breaching the $300 billion threshold for the first time. Furthermore, transaction volumes for these fiat-pegged assets reached new peaks, signaling their entrenched role as the primary medium of exchange and settlement layer within crypto markets.
• DeFi Volume Surpassing Centralized Counterparts: In a landmark shift, decentralized exchanges (DEXs) like Uniswap now reliably process more transaction volume than major centralized exchanges such as Coinbase. This trend underscores a maturation towards permissionless, non-custodial financial infrastructure, a core value proposition of the crypto economy.

Analyst Divergence on the 2026 Crypto Outlook

While Bitwise points to these fundamentals as cause for optimism, the broader analyst community remains divided on the trajectory for 2026. Tom Lee, Head of Research at Fundstrat, presents a more cautious view. He anticipates the market could struggle for most of the coming year, citing external macroeconomic headwinds like potential new tariffs and ongoing global political tensions. Lee suggests a significant rally may not materialize until the latter months of 2026.

Conversely, investment firm VanEck has tipped the first quarter of 2026 to be bullish for “risk-on” assets, including cryptocurrencies. VanEck’s analysts point to a growing sense of clarity around U.S. fiscal policy and signs of economic stabilization as key catalysts that could renew institutional and retail investor confidence. This split in professional opinion highlights the complex interplay between crypto’s internal fundamentals and the external macroeconomic environment that will shape its near-term future.

Catalysts That Could Propel Crypto in 2026

Looking beyond the current quarter, the Bitwise report outlines several potential catalysts that could drive the next major market cycle. Legislative progress on the proposed CLARITY Act in the United States, which aims to provide regulatory clarity for digital assets, is cited as a primary factor. Additionally, the anticipated announcement of a new Chair for the U.S. Federal Reserve could influence monetary policy and liquidity conditions favorable to assets like Bitcoin.

The report also highlights the ongoing “stablecoin supercycle,” where these assets see exponential adoption for global payments and settlements. Finally, Bitwise notes that three major wirehouses—large brokerage firms that serve independent financial advisors—are expected to open client access to spot Bitcoin and Ethereum Exchange-Traded Funds (ETFs) in early 2026. This move would dramatically expand the potential investor base, funneling significant traditional wealth into the regulated crypto investment products.

Conclusion

The Bitwise Q4 2025 report provides a crucial, data-driven perspective on the state of the cryptocurrency market. By identifying a clear divergence between sinking prices and soaring fundamentals—from record stablecoin adoption to dominant DEX volumes—the analysis makes a compelling case that the crypto bear market bottom may be in. While analysts debate the timing and triggers for the next bull phase, the foundational pillars of the industry appear stronger than ever. For investors, the current environment may represent a period of strategic accumulation, mirroring the opportunity that presented itself in early 2023, just before a historic multi-year advance. The convergence of strong on-chain metrics, potential regulatory clarity, and expanding institutional access sets the stage for a potentially transformative 2026.

FAQs

Q1: What is a “bear market bottom” in cryptocurrency?
A bear market bottom refers to the point where asset prices stop declining and fundamental conditions begin to improve, often while market sentiment remains negative. It is typically identified in hindsight but can be signaled by a sustained divergence between weak prices and strong underlying usage metrics.

Q2: Why does Bitwise compare Q4 2025 to early 2023?
Bitwise draws the comparison because both periods followed significant market downturns (2022’s bear market/FTX collapse and the 2024-2025 slump) and were characterized by poor price performance alongside strengthening fundamental data. Early 2023 marked the start of a massive bull run, suggesting similar conditions could precede another.

Q3: What are the key fundamental metrics showing strength?
The report highlights four areas: 1) Record-high transaction volumes on Ethereum and its Layer-2 networks, 2) Crypto company revenues outpacing other stock market sectors, 3) Stablecoin market cap surpassing $300 billion, and 4) Decentralized exchange volume exceeding that of major centralized exchanges.

Q4: What are the main risks to this optimistic outlook for 2026?
Key risks include adverse macroeconomic developments (e.g., new tariffs, prolonged high interest rates), slower-than-expected regulatory progress (like the CLARITY Act), and unforeseen geopolitical events that could dampen global risk appetite.

Q5: How does stablecoin growth indicate a healthy market?
Stablecoins are primarily used for trading, lending, and as a digital dollar within crypto ecosystems. Their growth in market cap and transaction volume indicates increased utility, liquidity, and real economic activity on blockchain networks, independent of speculative token price movements.