Asset manager Bitwise, in its Q4 2025 market report, highlights several "high-contrast" divergences historically seen at bear market bottoms. These signals last clustered in Q1 2023, after which crypto prices rallied significantly over two years.
Three Key Divergences: Price vs Fundamentals
1. Ethereum: Price down 29%, on-chain volume at record high
Ethereum dropped 29% in Q4 2025, yet its on-chain transaction volume hit an all-time high. The price weakness did not reflect the network's actual usage or adoption growth.
2. Crypto Stocks: Shares fall 20%, revenue growth 3x other sectors
Crypto-related equities fell about 20% in Q4. Bitwise notes that crypto companies' revenue growth is expected to be three times that of other industries — a classic value-investing buy signal when price and fundamentals diverge.
3. Market Sentiment: Bearish turn, stablecoins hit new highs
Sentiment has turned decidedly bearish, but stablecoin assets under management (AUM) and trading volumes both reached all-time highs. Stablecoin market cap has surpassed $300 billion, with annual trading volume of $46 trillion — roughly 2.5 times that of Visa.
Historical Precedent: Q1 2023 Pattern
Bitwise stresses that a similar divergence last occurred in Q1 2023. Back then, sentiment was equally gloomy, yet on-chain data and fundamentals showed resilience. In the following two years, Bitcoin surged from about $20,000 to over $100,000 by end of 2024 — a gain of more than 400%.
Such divergences — falling prices amid strengthening fundamentals — are often interpreted as potential bottom signals in traditional markets. Short-term price moves can overreact to emotion and liquidity, while long-term value is driven by actual adoption and fundamentals. When the gap becomes extreme, it may reflect mispricing.
Bitwise had earlier reported this year that Ethereum was in "one of its most undervalued ranges in recent years," consistent with the Q4 findings. The report does not provide direct investment advice but makes a clear implication: the most pessimistic, price-lowering moments can be opportune for fundamental investors.