Emerging Crypto Markets Thrive Amid Overall Bear Sentiment

Bitwise’s Q1 report highlights a thriving crypto sector amidst a bear market, noting significant growth in stablecoins, Bitcoin futures, and RWAs. Stablecoins reached an all-time high of over $218 billion, while RWAs grew by 37.07%. Institutional interest in crypto and changing central bank policies indicate a positive outlook for the future.

Bitwise, a prominent player in the crypto sector, reveals that certain segments of the digital asset ecosystem are witnessing significant activity despite an overall bearish market sentiment. In its Q1 report, Chief Investment Officer Matt Hougan describes the first quarter of 2025 as ‘frustrating’ yet ‘historically positive.’ He highlights impressive metrics such as the soaring adoption of stablecoins and an increase in Bitcoin futures trading volume, alongside a notable rise in the tokenization of real-world assets (RWAs).

The report indicates that stablecoins have reached an unprecedented asset under management (AUM) level, exceeding $218 billion, representing a 13.50% increase from the previous quarter. Additionally, transaction volumes experienced a notable surge of 30.14%. The tokenization of RWAs grew by 37.07% quarter-over-quarter, achieving a new all-time high. Notably, monitored trading volumes for regulated Bitcoin futures and open interest also peaked, implying a growing institutional inclination towards crypto as a macro trading asset.

As the market transitions into Q2, Hougan anticipates that these thriving areas will propel market growth. The uptrend in RWAs, especially in 2025, is primarily attributed to the tokenization of private credit and US Treasuries. Furthermore, Bitwise identifies Ondo Finance (ONDO) as a major competitor to BlackRock in the US Treasuries tokenization space, outperforming other firms such as Franklin Templeton and WisdomTree.

Additionally, central banks globally are signalling a shift towards looser monetary policies and an increase in M2 money supply. Such developments have historically benefited risk assets, including digital assets. This pivot in monetary policy could further bolster market conditions for cryptocurrencies, as indicated in Bitwise’s observations.