Author: 137Labs

In the first quarter of 2026, the cryptocurrency market did not see a rebound; instead, it further worsened in the downward trend that began at the end of 2025, gradually entering a more defined "bear market phase". Under the dual influence of a tightening macro environment and geopolitical conflicts, the entire industry has shown clear signs of contraction and restructuring.

To summarize this quarter in one sentence:

The market is not just declining, but undergoing a reshuffle.

I. Overall Market: Decline is Just the Surface, the Key is "Loss of Growth Momentum"

In Q1 2026, the total market capitalization of the cryptocurrency market shrank significantly:

• Total market capitalization fell to $2.4 trillion
• Quarterly decline of approximately 20%
• Compared to the peak in October 2025, the overall retracement is close to 45%

This marks the second consecutive quarter of decline.

More critically—the decline mainly concentrated in a short period from mid-January to early February.

An important trigger was the nomination of Kevin Warsh as chairman of the Federal Reserve, which the market interpreted as: future monetary policy may be more "hawkish" (interest rate hikes/tightening liquidity).

Changes in Market State

Throughout the quarter, a clear characteristic emerged: the market entered a sideways consolidation.

Even with geopolitical conflicts (such as the US-Iran war), there were no drastic fluctuations.

Note: Panic selling has been released, but funds have not re-entered.

Decline in Trading Activity

• Daily average trading volume dropped to approximately $117.8 billion
• Month-over-month decline of 27%

This means:

The market is not only falling but is also becoming "increasingly quiet."

II. Stablecoins: "Liquidity Anchor" in a Bear Market

In a significantly shrinking overall market, stablecoins displayed entirely different characteristics:

• Total scale remained approximately $309.9 billion
• Slight growth of approximately 0.5%

The underlying implication is critical: stablecoins have become a "funding docking point" in the market, rather than a risk asset.

Structural Changes: Funds are Being Redistributed

1) Tether experiences a supply contraction for the first time

• Decline of approximately 1.6%
• Market share still high at 59%

This is the first significant decrease since 2022.

Indication: A portion of funds is withdrawing from the crypto system.

2) USD Coin continues to grow

• Growth of approximately 2.4%

Indicating: more compliant and transparent stablecoins are gaining favor.

3) New players rapidly expanding

USDS, USD1 and others achieving 30%+ growth.

Essence:

Stablecoin competition has entered a "product + ecosystem-driven" phase.

III. Macro Asset Comparison: Cryptocurrency Assets Clearly Losing Position

The most noteworthy aspect of this quarter is not within the crypto circle, but in cross-asset performance:

Commodities are experiencing strong surges

• Crude oil increased by +76.9%
• Gold increased by +8.1%

Reasons:

• US-Iran conflict causing supply shocks
• Global risk aversion sentiment rising

Cryptocurrency assets are clearly lagging

• Bitcoin dropped 22%
• NASDAQ dropped approximately 7.1%
• S&P 500 dropped approximately 4.8%

The conclusion is very clear:

In a risk-averse environment, cryptocurrency assets are not considered "safe-haven assets".

At the same time:

The US Dollar Index (DXY) rose slightly.

Indicating:

Funds are flowing back to "traditional safe assets," rather than into crypto.

IV. Exchanges: Overall Decline in Activity

Centralized Exchanges (CEX)

• Total trading volume: $2.7 trillion
• Month-over-month decline: 39.1%

Key phenomena:

• January maintained high levels
• Then continued to decline
• In March, it fell to nearly two-year lows

Exchange Landscape

• Binance remains at the top (37%)
• MEXC second (10%)
• HTX experienced the largest decline

Essence:

In a bear market, there are no winners, only "those who fall less and those who fall more."

Decentralized Exchanges (DEX)

Solana continues to lead

Market share: 30.6%

Although trading volume has decreased, it still ranks first.

Changes in Competitive Landscape

BNB Smart Chain: second place

Ethereum: third place, but surpassed Solana in March.

Trend:

Competition among top chains is intensifying, rather than being one-sidedly overwhelming.

New chains are beginning to enter the spotlight

Monad has entered the top ten.

Indicating:

Even in a bear market, infrastructure competition continues.

V. The Most Interesting Change: "Trading Oil" Begins On-Chain

Hyperliquid

A very critical but easily overlooked trend is: Commodity trading is starting to go on-chain.

Data Performance

• Commodity perpetual contracts account for about 30% of total holdings
• Explosion of crude oil trading demand
• Daily trading volume even exceeded Bitcoin at one point

The Mechanism Behind It

Through the HIP-3 proposal: anyone staking funds can issue contracts, including stocks, gold, crude oil.

This means the crypto market is becoming a "24-hour global exchange".

VI. The Real Core Conclusion

1) The market enters a "defensive mode"

Funds flow towards stablecoins.

Investors reduce trading.

Risk appetite declines.

2) Crypto loses "independent trends"

No longer rising independently.

Clearly influenced by macro factors.

Essence:

Crypto has become a part of the global financial system.

3) Trading behavior is changing

Speculation is decreasing.

Practical demand is increasing (such as commodity trading).

4) A new narrative is forming

Past: NFT, meme, AI.

Now: stablecoins, RWA, commodity on-chain trading.

Conclusion

In the first quarter of 2026, the cryptocurrency market did not see a rebound; instead, under the combined pressures of macroeconomic factors and geopolitical conflicts, it officially entered a "structural bear market".

Funds are withdrawing from high-risk assets and shifting towards stablecoins and real asset mappings; trading activity continues to decline, while on-chain infrastructure is quietly evolving.

This is not just a cyclic downturn; it feels more like a key turning point for the crypto industry from a "speculative market" to "financial infrastructure".

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