Bitwise: DeFi quietly re-rating after outpacing Bitcoin

Bitwise released a report Thursday showing its index of major decentralized finance tokens fell about 4% in June while Bitcoin dropped roughly 22% over the same period. The report described the gap as unusual because DeFi assets typically fall harder in sell-offs.

Bitwise attributed the relative strength to changes in token economics and increased institutional adoption. The report said token models are being adjusted so token value more closely follows protocol usage, and noted firms building on protocols such as Morpho and Jupiter. Bitwise highlighted Aave, reporting roughly $900 million in revenue over the past year.

The DeFi index is market-cap weighted and currently has about 61% exposure to Hyperliquid’s native token HYPE. HYPE has risen more than 160% year-to-date and has supported the index’s performance. Other index constituents include Uniswap (UNI), Ondo (ONDO) and Aave (AAVE), each down by double digits year-to-date.

Broader DeFi activity has declined this year. CryptoRank data cited in the report show total value locked in DeFi fell nearly 40% through June, dropping to just over $70 billion from about $115 billion in January. The aggregator linked much of the decline to a market correction in early October following Bitcoin’s peak above $126,000.

Bitwise discussed upcoming regulatory and product developments. The firm expects a run of large companies to unveil stablecoin projects ahead of the GENIUS Act’s effective date in January 2027, and reported that stablecoin supply has held up during the downturn. The report said growth in stablecoins will benefit blockchains such as Ethereum and Solana as rules are finalized.

On the CLARITY Act, a market-structure bill under Senate review, Bitwise called the next three months “make-or-break” and said passage before the November elections is unlikely. The report added, “If it passes, we believe it likely marks this bear market’s bottom. If it fails, expect volatility initially, then a clearing of uncertainty as the industry keeps building under a pro-crypto SEC and CFTC.”

Bitwise concluded that DeFi’s outperformance could continue into the third quarter and wrote, “We think DeFi is quietly re-rating.”