Bitwise Says DeFi Tokens Are Holding Up Better Than Bitcoin as Market Reassesses Sector
Summary
- Bitwise said DeFi tokens have recently shown unusual strength relative to Bitcoin, suggesting the market may be undergoing a quiet reappraisal.
- Bitwise said the gap between token value and actual usage is narrowing, helped by the performance of its DeFi index, Hyperliquid (HYPE) and Aave (AAVE), as well as improving tokenomics and growing real-world usage.
- Bitwise said passage of future stablecoin legislation and the digital-asset market structure bill (CLARITY Act) could signal the bottom of the current bear market.
Forecast Trend Report by Period
Bitwise said decentralized finance tokens may be undergoing a quiet market reappraisal after recently showing unusual strength relative to Bitcoin.
In a report published July 10 and cited the same day by Cointelegraph, the crypto index-fund manager said its DeFi index fell 4% in June, compared with a roughly 22% drop in Bitcoin.
DeFi tokens typically move far more sharply than Bitcoin, making that relative resilience unusual and largely overlooked by the market, Bitwise wrote. The ecosystem is also becoming more stable as traditional institutions begin using DeFi protocols in practice. Tokenomics are improving, and the gap between actual usage and token valuations is narrowing, it added.
Bitwise pointed to Aave as an example. Institutions are participating in protocols such as Morpho and Jupiter, while Aave alone generated about $900 million in revenue over the past year, the report said.
Bitwise's DeFi index is market-cap weighted, with 61% of the portfolio currently concentrated in Hyperliquid, or HYPE. Hyperliquid has risen more than 160% this year. The index's other holdings, including Uniswap, Ondo and Aave, are all down by double digits year to date.
Total value locked across DeFi has fallen about 40% this year. Data from crypto platform CryptoRank show DeFi TVL dropped to about $70 billion at the end of June from about $115 billion in January. The main driver was a broad market correction after Bitcoin's peak above $126,000.
Bitwise identified stablecoin legislation and a digital-asset market structure bill as key variables for the market ahead. The firm said the GENIUS Act, a stablecoin regulatory law enacted in the US last year, is due to take effect in January 2027, setting the stage for a wave of stablecoin project announcements from large companies. On the CLARITY Act, a crypto market structure bill now under Senate review, Bitwise said passage would signal the bottom of the current bear market. Rejection would likely increase short-term volatility, though the firm said uncertainty should eventually ease as the industry continues expanding under crypto-friendly leadership at the SEC and CFTC.
