Bitwise Report: RWA and Prediction Markets Reach New Highs Amid Crypto Market Downturn

Original source: Bitwise

Compiled by Odaily Planet Daily, Qin Xiaofeng (@QinXiaofeng 888 )

Editor's Note: Cryptocurrency asset management firm Bitwise recently released its Q2 2026 report.

The report states that the Bitwise 10 Large-Cap Crypto Index fell 15.4%, with eight of its ten components posting negative returns; spot Bitcoin ETFs saw $4.9 billion in outflows, marking the worst quarterly performance on record; on-chain transaction activity, trading volume, and DeFi assets all declined, while the correlation between cryptocurrencies and stocks increased.

Of course, the market also had its highlights: open interest in prediction markets reached a record high of $1.8 billion, with quarterly trading volume hitting $43 billion; the total value of tokenized real-world assets reached $33 billion in the second quarter, a 45% increase since the beginning of the year; and crypto stocks performed well, with the Bitwise Crypto Innovators 30 Index rising 30.6%, largely driven by Bitcoin mining companies related to AI.

Overall, the situation is grim. Even worse, this sense of difficulty is very real. While no statistical metric measures “sentiment,” the current sentiment in the crypto industry is among the worst I’ve seen in my eight years in the field. One reason: this is our third consecutive quarter of negative returns—the longest streak of declines since 2022, when we experienced four consecutive quarters of negative returns,” wrote Matt Hougan, Chief Investment Officer at Bitwise.

Here are some key data charts extracted from the report, enjoy~

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In the second quarter, we saw a Strategy that claimed to "never sell" sell Bitcoin, first conducting small-scale tests and ultimately selling $218 million worth of Bitcoin at the end of June to pay dividends.

Affected by related selling pressure, Bitcoin fell below $60,000 in June, reaching its lowest level since 2024, a 52% decline from its peak of $126,080 in October last year, marking nine months of crypto winter. Meanwhile, spot Bitcoin ETFs experienced net outflows of $4.9 billion in the second quarter, the largest quarterly net outflow since their launch.

On the policy front, the much-watched CLARITY Act has stalled in the Senate due to issues with ethics and enforcement provisions, and market predictions for its passage by 2026 have now dropped to 40%.

Here are the top ten crypto events of Q2, as summarized by Bitwise:

The third quarter is critical for the success or failure of the CLARITY Act. The market structure bill has passed the Senate Banking Committee in the second quarter but has stalled due to ethics provisions related to the President’s family’s crypto interests. Prediction markets show its probability of passage by 2026 has dropped to nearly 40%, down from 75% in mid-May, and we believe it is unlikely to pass before the November midterm elections. However, bills with such probabilities often still succeed, so we believe CLARITY still has a chance. If the bill passes, we believe this could signal the bottom of this bear market; if it fails, short-term volatility is expected, followed by a gradual reduction in uncertainty as the industry continues advancing under supportive SEC and CFTC oversight.

Stablecoin expansion following the GENIUS Act. July marks the final sprint before the GENIUS Act takes effect in January 2027, with regulators needing to finalize rules in the third quarter. We expect a wave of major companies to announce stablecoin projects prior to official launch, such as the recently unveiled OpenUSD, backed by Stripe, BlackRock, Visa, Coinbase, and approximately 140 other companies. Stablecoin supply has remained near $300 billion since last fall, demonstrating resilience amid crypto market sell-offs. We believe that as the January effective date approaches, accelerated stablecoin growth will serve as a catalyst for public blockchains such as Ethereum and Solana in the third quarter.

The Fed under Wash. The Federal Reserve has a new chair, Kevin Wash, and the market knows little about his policy style. The first signals will emerge in the third quarter: the July FOMC meeting and the Fed’s annual symposium in Jackson Hole at the end of August. So far, Wash has kept rates unchanged and signaled no rush to cut. By the end of the quarter, we should have a clearer picture of the Fed’s direction. It’s still too early to judge the path of interest rates, but the Fed sets the tone for all risk assets, and any outcome will be quickly absorbed by the market.

The quiet reevaluation of DeFi. Over the past month, Bitcoin declined by approximately 22%, while Bitwise’s DeFi Index fell only 4%. DeFi typically exhibits far greater volatility than Bitcoin, making such resilience rare and nearly unnoticed. We believe DeFi is undergoing a quiet reevaluation: token economics are improving, the gap between usage and token value is narrowing, and real institutions are building on protocols like Morpho and Jupiter—Aave alone generated approximately $900 million in revenue over the past year. We expect DeFi’s strong performance to continue into Q3, a shift that markets often detect with delay.

Halfway through 2026, cryptocurrency asset prices have declined by 36%. The only other major asset class to record a decline is gold, down 7%, while all others have risen. This is one reason why this crypto winter has been particularly harsh—it’s a lonely winter.

However, it is worth noting that crypto stocks delivered 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 publicly traded crypto-economy companies, returned more than double that of U.S. stocks.

This shows that even in a bear market, investment opportunities in the crypto space continue to emerge. Bitcoin mining companies are benefiting from tailwinds brought by AI; stablecoin issuers and tokenization platforms are riding the wave of Wall Street adoption; and the connection between traditional finance and crypto is growing stronger. Although I expect crypto assets to rebound in the second half of the year, the first half reinforced an important insight: crypto is not a single entity, but a diverse and dynamic ecosystem that should be viewed through a broader lens.

The performance of cryptocurrencies compared to major asset classes is as follows:

Data sourced from Bloomberg. Data as of June 30, 2026.

Over the past 12 months, the top ten crypto apps generated a combined revenue of $5.9 billion. The top three—PancakeSwap, Hyperliquid, and Aave—each earned close to $1 billion. These are all operational businesses earning fees from trading, lending, and staking—even during a bear market.

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

Data sourced from Token Terminal, covering the period from January 1, 2025, to June 30, 2026.

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

U.S. Treasury Secretary Scott Bessent himself stated just 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 already arrived. Tokenized real-world assets (RWA) reached a record $33 billion in the second quarter, growing 12% for the quarter and 45% year-to-date, with particularly rapid growth in tokenized U.S. Treasuries, corporate credit, equities, and venture capital.

When I look at this chart, I see the world’s largest asset management company rapidly moving massive amounts of assets on-chain — and that’s worth paying attention to.

The scale of tokenized real-world assets (RWA), as shown below:

Data is sourced from RWA.xyz, covering the period from January 1, 2020, to June 30, 2026.

Note: Stablecoin issuers such as Circle and Tether are omitted from the above diagram.

Open interest in prediction markets reached a record high of $1.8 billion in the second quarter, with the sports category becoming the largest segment. Quarterly trading volume also hit a record of $43 billion.

Applications like Polymarket illustrate the subtlety of retail adoption of cryptocurrency: millions of people are using crypto infrastructure to trade on the outcomes of real-world events, yet most of them are unaware of or unconcerned that crypto provides the underlying technology.

As the U.S. midterm elections approach, trading volume and open interest in prediction markets this year will continue to set new all-time highs. After all, politics was the category that brought prediction markets into the mainstream in 2024, and since then, the market size has tripled.

Open interest in prediction markets, as shown below:

Data sourced from Blockworks Research, covering the period from January 1, 2023, to June 30, 2026.

Returning to crypto equities, one of the most interesting charts is the 90-day rolling correlation of the Bitwise Crypto Innovators 30 Index versus other major asset classes. Notably, the index shows lower correlation with nearly all other categories compared to U.S. equities: including developed market stocks, emerging market stocks, U.S. REITs, U.S. bonds, and gold. (The only exception is commodities, where both exhibit negative correlation.)

In other words: In the first half of 2026, crypto stocks delivered more than double the returns of U.S. stocks, while exhibiting lower correlation with nearly all other assets in a portfolio. This combination of returns and diversification is enough to excite investors.

Correlation of selected assets and asset classes (90-day rolling), as shown below:

Data sourced from Bloomberg, as of June 30, 2026.

As you review these pages, pay close attention to the charts. Nearly all metrics—price, on-chain activity, trading volume—are far from their respective all-time highs. Given that the price has dropped more than 50% from its peak last October, this is not surprising.

But when comparing the same data to the previous bear market bottom in 2022, the picture is markedly different. Ethereum transaction activity has increased by approximately 13 times compared to the second quarter of 2022. DeFi total value locked has risen by more than 60%. Stablecoin volumes have roughly doubled. The only thing that hasn’t kept pace appears to be price.

I believe this precisely reflects where we truly stand today: the market is pricing an industry that is now twice the size of the previous cycle’s bottom, with deeper liquidity and stronger fundamentals, at bear market levels—while Wall Street has finally come on-chain.

Such a foundation cannot stop the winter, but it determines what will grow in the spring.

That concludes my analysis for this quarter. While these 50+ charts cannot answer the question we’ve been asked most frequently lately: “Has the crypto price bottomed out?” they do point to resilient fundamentals in the crypto space—where usage, revenue, and adoption continue to grow even during a bear market.

For me, this is precisely an intriguing field—the foundation upon which the next cycle will be built.