Bitwise’s Q2 2026 Market Review shows that the crypto market has recorded negative returns for three consecutive quarters—the longest such streak since 2022. Amid weakening prices, inflows into spot Bitcoin ETFs have slowed, and on-chain activity and DeFi scale have also declined.
The broader market and ETFs are under simultaneous pressure.
The Bitwise 10 Large-Cap Crypto Index fell 15.4% in the second quarter, with eight of its ten constituent assets closing lower. Bitwise attributed this performance to widespread pressure on major crypto assets during the second quarter.
The report also noted that U.S. spot Bitcoin ETFs experienced their largest net outflow since their launch in the quarter. As these funds have been a key channel for institutional capital to enter the Bitcoin market, the outflow has further increased selling pressure.
However, ETF fund flows are not one-directional. Bitwise noted that Bitcoin ETFs experienced seven consecutive weeks of net inflows through May 2026, accumulating over $3.4 billion, indicating that institutional demand remained volatile during this cycle.
On-chain data remains stronger than the 2022 low.
Bitwise reported that on-chain activity, trading volume, and DeFi protocol total value locked all declined in the second quarter. At the same time, the correlation between crypto assets and stock markets increased, with price performance becoming more aligned with traditional risk assets.
- Ethereum transaction activity has increased by approximately 13 times since the 2022 low.
- The total value locked in DeFi has increased by over 60% since then.
- The total value of stablecoins has roughly doubled since the 2022 low.
Bitwise believes that the overall industry size is currently about twice what it was at the bottom of the previous cycle, with price performance being the main area of lag.
Stablecoins, RWA, and prediction markets continue to expand.
Despite weaker crypto prices, certain niche sectors continue to grow. Bitwise reports that stablecoin settlement volumes have reached 2.3 times the volume processed by Visa, and the amount of U.S. Treasuries held by stablecoin issuers now exceeds that of most countries.
The report also cites data showing that the real-world asset tokenization market grew by 50.3% in the first half of 2026, reaching $32.89 billion. This market primarily includes assets such as tokenized government bonds, private credit, and investment funds.
Predicted trading volume in the derivatives market rose to $43.2 billion in the second quarter, approximately 18 times the level of the same period last year. Bitwise also noted that Hyperliquid, PancakeSwap, and Aave each generated approximately $900 million in revenue over the past year, indicating continued demand for decentralized trading, lending, and derivatives platforms.
Overall, Bitwise believes that network usage and institutional participation in the crypto industry have significantly improved since the 2022 lows, but this does not mean that short-term price pressures have ended.