Bitwise Report: RWA and Prediction Markets Continue to Hit New Highs, Crypto is Forming a Bottom

Original article from Bitwise

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

Editor's Note: Crypto asset manager Bitwise recently released its Q2 2026 report.

The report states that the Bitwise 10 Large Cap Crypto Index fell by 15.4%, with 8 out of its 10 constituent assets posting negative returns. Spot Bitcoin ETFs saw outflows of $4.9 billion, marking their worst quarterly performance on record. On-chain transaction activity, trading volumes, and DeFi assets all declined, while the correlation between cryptocurrencies and stocks increased.

Of course, there were bright spots in the market. Open interest in prediction markets reached an all-time high of $1.8 billion, with quarterly trading volume hitting $43 billion. The total value of tokenized real-world assets reached $33 billion in Q2, up 45% from the start of the year. Crypto equities also performed well, with the Bitwise Crypto Innovators 30 Index rising 30.6%, largely driven by AI-related Bitcoin mining companies.

"Overall, the situation is grim. To make matters worse, the feeling of hardship is equally real. While there’s no statistical indicator to measure 'vibes,' the current atmosphere in the crypto industry is among the worst I’ve seen in my eight years in the space. One reason: this marks our third consecutive quarter of negative returns, the longest losing streak since 2022 (when we had four consecutive quarters of negative returns)," wrote Matt Hougan, Chief Investment Officer at Bitwise.

Below are some key data charts excerpted from the report. Enjoy~

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Top 10 Key Events of Q2

In Q2, we saw Strategy, which once vowed "never to sell," sell Bitcoin. It started with small test transactions and ended with a $218 million Bitcoin sale at the end of June to pay dividends.

Affected by these sales, Bitcoin fell below $60,000 in June, hitting its lowest price since 2024. This represents a 52% decline from its peak of $126,080 (in October last year), extending the crypto winter to nine months. Meanwhile, spot Bitcoin ETFs saw $4.9 billion in outflows in Q2, their largest quarterly net outflow since launch.

On the policy front, the much-anticipated "CLARITY Act" has not progressed smoothly in the Senate, stalled by ethical and enforcement clause issues. The prediction market probability of its passage in 2026 has also fallen to 40%.

Here are Bitwise's top 10 crypto events for Q2:

Q3 Outlook

Q3 is a make-or-break period for the CLARITY Act. This market structure bill passed the Senate Banking Committee in Q2 but stalled over ethical clauses related to the President's family's crypto interests. Prediction markets show its probability of passage in 2026 is near 40%, down from 75% in mid-May. We believe passage before the November midterm elections is unlikely. However, bills with this probability often pass, so we think CLARITY still has a chance. If passed, we believe this could mark the bottom of the current bear market. If it fails, we expect short-term volatility, followed by a gradual dissipation of uncertainty as the industry continues to advance under a crypto-friendly SEC and CFTC.

Stablecoin expansion post-GENIUS Act. July marks the final sprint before the GENIUS Act takes effect in January 2027, with regulators needing to finalize rules in Q3. We expect a wave of major enterprises to announce stablecoin projects before the official launch, such as the recently revealed OpenUSD, backed by Stripe, BlackRock, Visa, Coinbase, and around 140 other companies. Since last fall, stablecoin supply has remained near $300 billion, showing resilience amidst the crypto market sell-off. We believe that accelerating stablecoin growth, as the January effective date approaches, will act as a catalyst for public chains like Ethereum and Solana in Q3.

The Fed under Kevin Warsh. The Federal Reserve has a new chair, Kevin Warsh, and the market knows little about his governing style. Q3 will provide the first signals: the July FOMC meeting and the Fed's annual Jackson Hole symposium in late August. So far, Warsh has held rates steady and hinted at no rush to cut. By the end of the quarter, we should have a clearer picture of the Fed's direction than we do now. It's too early to predict the path of interest rates, but the Fed sets the tone for all risk assets, and any outcome will be quickly priced in by the market.

The quiet revaluation of DeFi. Over the past month, Bitcoin has fallen about 22%, while Bitwise's DeFi index declined only 4%. DeFi is typically much more volatile than Bitcoin, making this resilience rare and largely unnoticed. We believe DeFi is undergoing a quiet revaluation: tokenomics are improving, the gap between usage and token value is closing, real institutions are building on protocols like Morpho and Jupiter, and Aave alone generated roughly $900 million in revenue over the past year. We expect DeFi's outperformance to continue in Q3, a shift the market often catches up to belatedly.

Crypto Equities and Crypto Assets Diverge Significantly

Halfway through 2026, crypto asset prices have fallen 36%. Among other major asset classes, the only one to post a decline was gold, down 7%, while all others rose. This is one reason this crypto winter feels especially harsh – it's a lonely winter.

But notably, crypto equities posted 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 listed crypto economy companies, delivered more than double the return of US stocks.

This shows that even in a bear market, investment opportunities in the crypto space continue to emerge. Bitcoin miners benefit from the AI tailwind; stablecoin issuers and tokenization platforms ride the wave of Wall Street adoption; the ties between traditional finance and the crypto world are strengthening. While I expect crypto assets to rebound in the second half of the year, the first half reinforced a key insight: crypto is not a monolith but a diverse, dynamic field that should be viewed from a broader perspective.

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

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

Crypto Applications Generate Significant Revenue

Over the past 12 months, the top ten crypto applications generated a combined revenue of $5.9 billion. The top three (PancakeSwap, Hyperliquid, and Aave) each generated nearly $1 billion in revenue. These are legitimate operating businesses, earning fees from trading, lending, and staking – even during a bear market.

Top 10 crypto applications by revenue, as shown below:

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

(1) Revenue consists of total fees paid by users; (2) Hyperliquid revenue excludes HyperEVM fees.

The Bull Market for Real World Assets (RWA)

US Treasury Secretary Scott Bessent himself said 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 describes is already here. Tokenized real-world assets (RWA) reached a record $33 billion in Q2, growing 12% in the quarter and 45% year-to-date, with tokenized US Treasuries, corporate credit, equities, and venture capital growing particularly rapidly.

When I look at this chart, I see the world's largest asset managers moving assets onto the blockchain at full speed and scale. That's worth paying attention to.

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

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

Note: The chart above omits stablecoin issuers like Circle and Tether.

Prediction Markets Continue to Expand

In Q2, open interest in prediction markets hit an all-time high of $1.8 billion, with sports becoming the largest category. Quarterly trading volume also set a record, reaching $43 billion.

Applications like Polymarket illustrate the stealthy nature of retail crypto adoption: millions of people are using crypto infrastructure to trade outcomes of real-world events, but most don't know or care that crypto provides the underlying technology.

With the US midterm elections approaching, trading volumes and open interest in prediction markets are expected to hit multiple new highs this year. After all, politics was the category that brought prediction markets into the mainstream in 2024, and the market size has tripled since then.

Prediction market open interest is shown below:

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

Low Correlation of Crypto Equities with Major Assets

Returning to crypto equities, 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, its correlation is lower with almost all other categories compared to US stocks: including developed market stocks, emerging market stocks, US REITs, US bonds, and gold (the only exception being commodities, where both correlations are negative).

In other words: in the first half of 2026, crypto equities delivered more than double the return of US stocks while exhibiting lower correlation with almost every other asset in a portfolio. This combination of return and diversification is enough to excite any investor.

Correlation of select assets and asset classes (90-day rolling) is shown below:

Data from Bloomberg, as of June 30, 2026.

Closing Thoughts

As you flip through these pages, look closely at the charts. Almost all metrics – prices, on-chain activity, trading volumes – are far from their all-time highs. Given that prices have fallen over 50% from their peak last October, this is not surprising.

But if you compare the same data cyclically to the last bear market bottom – 2022 – the picture is completely different. Ethereum transaction activity has grown roughly 13x compared to Q2 2022. DeFi total value locked has risen over 60%. Stablecoin supply has roughly doubled. It seems only price has failed to keep pace.

I believe this accurately reflects where we truly stand: the market is pricing an industry, at bear market valuations, that is already twice the size it was at the bottom of the last cycle – an industry with deeper liquidity, stronger fundamentals, and Wall Street finally coming on-chain.

Such foundations cannot prevent winter, but they determine what grows in spring.

That's my take on this quarter. Of course, none of these 50-plus charts can answer the question we get asked most: "Has crypto bottomed out?" But they do point to the resilient fundamentals of crypto – a space where usage, revenue, and adoption continue to grow even during a bear market.

To me, that's what makes this sector so compelling – and the foundation upon which the next cycle will be built.