CIO Bitwise: DeFi will pull the crypto market out of the "bear market" - ForkLog: cryptocurrencies, AI, singularity, the future

# CIO Bitwise: DeFi Will Lead the Crypto Market Out of the “Bear Market”

The decentralized finance (DeFi) sector has the potential to pull the industry out of a prolonged correction, says Bitwise Investment Director Matt Hougan.

“Bear phases open up huge opportunities for those who pay attention. Right now, one is forming in DeFi,” noted the expert.

According to him, the leaders in the segment have already become “serious businesses with real users.” Trading volumes on Uniswap regularly surpass Coinbase’s figures, and Aave’s annual revenue exceeds $100 million.

Monthly trading volumes on Uniswap. Source: DefiLlama. Recent changes in governance of leading protocols and the influx of institutional investments indicate strengthening fundamental indicators in the sector. Hougan is confident that these will be the main drivers of the next bull market.

“Crypto investors are tired of promises; they want to see real users, revenue, and value. DeFi fits this description perfectly,” he stated.

A New Phase for DeFi

The main event for Bitwise’s investment director was the new proposal for managing Aave called Aave Will Win. Historically, DeFi tokens have been “poor investments.” Despite the development of many decentralized platforms, their governance tokens have plummeted:

• Over the past year, AAVE’s price has dropped 50%;
• UNI is trading at levels not seen in five years.

Weak performance is largely attributed to regulatory pressure. During the launch of many projects, the SEC took a tough stance, using the Howey test to classify assets as securities.

To avoid regulatory issues, developers intentionally deprived tokens of income rights. As a result, the market was filled with “empty shells” — governance tokens economically disconnected from the success of the protocols themselves.

In Hougan’s opinion, the Aave Labs initiative changes the game. It proposes that all revenue from products under the Aave brand will be directly allocated to the DAO treasury, owned by token holders. The deal also involves transferring intellectual property rights and revising the incentive system between developers and the community.

“Theoretically, every dollar of revenue from the products will go to the DAO. It will decide how to use the funds — for example, to finance Aave development, buy back tokens, or create reserves,” emphasized the expert.

In this scenario, AAVE would become the central economic asset of the ecosystem, and the developer company would act as a service provider interested in the token’s growth.

The initiative has sparked discussions within the community, but Hougan believes that the overall trend toward strengthening tokenomics could transform the sector.

“Looking broader, a big picture is emerging. AAVE — the second-largest DeFi asset — is transforming from a governance token into a token whose holders have a clear right to protocol revenues. If Aave can do this, other DeFi projects will be able to as well,” summarized the Bitwise investment director.

Pressure on Altcoin Markets

The “altcoin” sector is experiencing tough times. Selling pressure has reached a five-year high, noted CryptoQuant contributor IT Tech.

Altcoin Sell Pressure Just Hit a 5-Year Extreme

“Retail is out. Smart money rotated. No institutional altcoin accumulation in sight. This is not a dip. It’s 13 months of continuous net selling on CEX spot.” — By @IT_Tech_PL pic.twitter.com/xtu8MIK0Fd
— CryptoQuant.com (@cryptoquant_com) February 18, 2026

In just the last 13 months, the cumulative difference between crypto purchase and sale volumes, excluding Bitcoin and Ethereum, has fallen by $209 billion.

Back in January 2025, supply and demand were balanced — the indicator was near zero. However, since then, continuous net sales have been recorded on centralized spot exchanges. The decline is happening amid a correction in digital gold, which is trading around $67,500 at the time of writing.

The analyst highlighted structural changes in market participant behavior:

• Retail investors have exited altcoin positions;
• “Smart money” has rotated into other assets;
• Institutional interest in accumulating “alternative coins” has waned.

IT Tech believes that what is happening cannot be called a typical dip. The indicators suggest not that a bottom has been reached, but that there is a genuine lack of buyers in the altcoin segment.

Recall that Matrixport reported a depletion of Bitcoin seller pressure. According to them, market sentiment has fallen to extreme lows.