Bitwise Says DeFi May Be Quietly Outperforming Bitcoin

“DeFi typically experiences much larger price swings than Bitcoin, so this level of resilience is unusual,” Bitwise said, noting that decentralized finance tokens have recently outperformed Bitcoin.

Decentralized finance (DeFi) tokens have remained surprisingly resilient against Bitcoin over the past month, indicating that the market may be quietly assigning greater value to the sector, according to crypto index fund manager Bitwise.

Bitcoin (BTC) declined by roughly 22% in June, while Bitwise’s index of major DeFi protocol tokens dropped just 4% during the same period, according to the firm’s report released on Thursday.

“DeFi usually swings much harder than Bitcoin, so holding up this well is unusual, and almost no one is talking about it,” it said.

DeFi tokens have long been known for their sharp price swings during periods of crypto market volatility, as risk-averse traders often sell them first. However, Bitwise said the trend is shifting as traditional financial institutions increasingly adopt these protocols, helping to strengthen and stabilize the broader DeFi ecosystem.

“We believe DeFi is quietly being revalued,” Bitwise said. “Token economics are improving, the disconnect between protocol usage and token valuations is narrowing, and major institutions are building on platforms like Morpho and Jupiter, while Aave alone has generated around $900 million over the past year.”

“We expect DeFi’s outperformance to keep playing out in Q3, the kind of shift the market tends to notice late,” it added.

Bitwise’s DeFi index fund is weighted by market capitalization, with its portfolio currently allocating 61% to Hyperliquid (HYPE), the native token of the crypto perpetuals exchange. The token has climbed more than 160% since the start of the year.

The index also includes holdings in Uniswap (UNI), Ondo (ONDO), and Aave (AAVE), among other tokens, all of which have recorded double-digit declines since the beginning of the year.

DeFi Total Value Locked Declines Throughout 2026#

Although HYPE has helped support the overall value of DeFi tokens, total value locked (TVL) across the DeFi sector has dropped nearly 40% this year through June. According to CryptoRank’s June 24 report, TVL declined from about $115 billion in January to just over $70 billion.

The crypto data aggregator attributed the decline to the sharp market correction in early October, which followed the broader crypto market peak when Bitcoin climbed above $126,000.

However, the company noted that the current market pullback is still less severe than the downturn seen during the 2022 bear market, suggesting that the DeFi sector has become more resilient.

Bitwise Warns of Stablecoin Uncertainty and Market Volatility if CLARITY Act Fails#

In its latest report, Bitwise also highlighted several upcoming developments that it believes could have a significant impact on the broader crypto market.

The firm said it expects a steady stream of major companies to announce stablecoin initiatives ahead of the GENIUS Act, the US stablecoin regulation passed into law last year that is scheduled to take effect in January 2027.

The firm added that stablecoin supply has remained resilient despite the broader crypto market downturn. It expects continued growth in the sector to benefit blockchains such as Ethereum and Solana this quarter as regulators finalize the rules for implementing the GENIUS Act.

Bitwise said the next three months are likely to be a critical period for the CLARITY Act, the crypto market structure bill currently being reviewed and negotiated in the Senate. The firm added that it sees only a slim chance of the legislation passing before the November elections.

“If the bill passes, we believe it could mark the bottom of this bear market,” Bitwise said. “If it does not, we expect initial volatility, followed by greater clarity as the industry continues to grow under a pro-crypto SEC and CFTC.”