Original Title: Q1 2026 Review: Crypto Markets Reset as Traditional Assets Go 24/7
Original Author: Tanay Ved, Coin Metrics
Original Translation: Chopper, Foresight News
TL;DR
· Against the backdrop of a turbulent macroeconomic and geopolitical environment, the crypto market continues to face pressure, but ETF demand has gradually improved this quarter, providing support for Bitcoin at its current price level.
· On-chain trading platforms and asset tokenization further promote the entry of traditional assets into the 24/7 trading market, with perpetual contracts for stocks and indices launched by platforms like Hyperliquid, along with newly added stock perpetual products on mainstream trading platforms, driving a steady increase in open positions.
· The total supply of stablecoins remains stable at around 30 billion USD, with the adjusted transfer volume climbing to about 21.5 trillion USD in Q1 2026; regulatory policies related to stablecoin yields and issuance are gradually becoming clearer, continuing to influence industry development.
The first quarter of 2026 has come to a close, marking a critical point to review the dynamics and core themes of the crypto market. This quarter, geopolitical and macroeconomic uncertainties intertwined, resulting in an overall market characterized by risk aversion and high volatility. Despite the challenges faced by the crypto market, with a total market cap drop of about 22%, areas such as tokenized stocks and traditional asset on-chain trading have become highlights of the industry, with substantial progress in infrastructure. This article will review Q1 2026 and analyze the trends and core themes shaping the market during this quarter.
Market Performance
Bitcoin's price fell from about 95,000 USD in February by more than 30%, with a year-to-date loss of 22%. In addition to macroeconomic pressures, the widespread sell-off of risk assets and derivatives market liquidations have exacerbated the downward trend, rekindling discussions about Bitcoin's safe-haven properties and value storage functions.
However, since the outbreak of the Iran conflict on February 28, Bitcoin has proven stronger than stocks and gold, reflecting a certain degree of resilience and signs of demand recovery.
Data Source: Coin Metrics and Google Finance
There is a notable divergence in the internal performance of crypto assets, with only a few altcoins exhibiting strong narratives and real usage growth outperforming the market.
Outstanding tokens include Hyperliquid (HYPE), Bittensor (TAO), and Morpho (MORPHO), all of which saw quarterly increases of over 30%. Hyperliquid benefited from growth in the HIP-3 market (particularly in commodities and stock indices), expanding its business scope from crypto assets to more asset classes; Bittensor and Morpho rely respectively on the growth of AI infrastructure and decentralized finance lending, with institutional interest in decentralized AI and vault management businesses continuing to rise.
Data Source: Coin Metrics
Bitcoin Demand Gradually Stabilizes
The risk aversion seen at the beginning of this quarter reversed in March. Despite ongoing signs of market weakness, demand for Bitcoin spot ETFs improved significantly, reversing the trend of capital outflows that had persisted since November 2025. Rolling data over 30 days shows a net inflow of more than 30,000 Bitcoin into ETFs, supporting Bitcoin's consolidation around the 70,000 USD mark.
Data Source: Coin Metrics Network
The sustainability and acceleration of this demand largely depend on the macro environment and policy direction. Easing geopolitical risks, slowing inflation, the return of interest rate cuts, and the ongoing increase in demand for ETF and crypto asset treasury (DAT) allocations (including a $42 billion Bitcoin fundraising plan by institutions like Strategy) are expected to further solidify capital inflows.
24/7 On-Chain Market and Tokenized Stocks
Hyperliquid and the Traditional Asset Track
One of the core trends this year is the accelerated integration of traditional financial markets with on-chain infrastructure through asset tokenization and 24/7 trading. The growth of perpetual contracts for traditional assets is the most direct manifestation of this trend.
Following Hyperliquid's launch of the HIP-3 market covering categories such as stocks, indices, and commodities, the proportion of non-crypto asset trading volume significantly increased to about 45% this quarter. Amid the impact of geopolitical conflicts, traders sought 24/7 exposure to assets like metals and crude oil, leading to significant increases in overall trading volume and open positions on the platform; among which, open positions for traditional assets in the HIP-3 system accounted for about 28% of the platform's total.
Data Source: Coin Metrics
The Rise of Stock Perpetual Contracts
In this niche, as trading platforms continually expand their offerings, mainstream stocks and indices have become the fastest-growing categories. Kraken launched xStocks perpetual contracts in February, while Coinbase international site introduced stock perpetual products, providing investors with leveraged exposure to US stocks.
At the same time, Hyperliquid's largest HIP-3 deployer [XYZ] partnered with S&P Dow Jones Indices to launch the first official S&P 500 perpetual contract, further enriching the global stock exposure trading market.
Data Source: Coin Metrics
Open interest for Hyperliquid's stock and index perpetual contracts has steadily risen, with core indices like XYZ100 (Nasdaq 100) and S&P 500 becoming some of the largest trading categories by open interest on the platform, while individual stocks such as Nvidia (NVDA) and Micron Technology (MU) have also established considerable liquidity.
Meanwhile, the issuance of tokenized stocks and funds is growing in tandem, from the xStocks framework to tokenized money market funds and stock funds issued by institutions such as Ondo on Ethereum and Solana, all showing growth trends.
The growth of tokenized stocks and perpetual contracts for real-world assets (RWAs) confirms a trend: on-chain platforms are gradually becoming a 24/7 extension of traditional markets rather than merely crypto-native trading venues.
Stablecoins: Supply Stable, Usability Continues to Rise
Stablecoins continue to play a foundational role in on-chain liquidity. Despite the overall market decline, the total supply of stablecoins remained stable at around 30 billion USD in Q1 2026, with a slight rebound in supply growth on February 30.
The most noticeable growth among stablecoins is USDS, issued by Sky Protocol (formerly MakerDAO), which is a USD-pegged stablecoin collateralized by crypto and real-world assets, with supply increasing by 43% to about 8 billion USD; Circle's USDC reached a scale of 77 billion USD, while USDT stabilized at around 184 billion USD.
Data Source: Coin Metrics
While supply remains stable, the velocity and utilization of stablecoins have significantly increased. The adjusted total transfer amount of stablecoins reached 21.5 trillion USD in Q1, about 3 times that of the same period in 2025. More than 80% of the trading volume came from USDC, whose usage share compared to USDT has continued to expand. This activity is primarily driven by USDC on the Base chain, which alone achieved transfer volumes of 13 trillion USD in Q1.
As we analyzed in a recent report, a large portion of these capital flows comes from liquidity provider rebalancing, flash loans, and other DeFi infrastructure activities rather than end-user payments or settlements, though the latter scenarios are also experiencing synchronized growth.
Data Source: Coin Metrics
In the future, the direction of the stablecoin industry may depend on yield mechanisms and issuance rules. The latest draft of the CLARITY Act proposes to prohibit passive income generation from stablecoin balances but allows for operational rewards tied to payments and platform usage. This provision may change the business models of core participants.
For Coinbase, where stablecoin revenue accounts for over 25% of total revenue, restricting USDC yields may hinder its ability to attract and retain capital; while Circle is relatively less affected, and if high interest rate environments persist, with clear regulatory rules, its revenue related to payments and transactions is expected to benefit. As the legislation progresses, its impact on DeFi lending, yield-bearing stablecoins, and tokenized government bonds is worth ongoing attention.
U.S. SEC Releases Digital Asset Classification Framework
This quarter brought significant clarity from regulators. The U.S. SEC and the Commodity Futures Trading Commission (CFTC) jointly released explanatory documents outlining a classification framework for digital assets divided into five categories, clarifying the positioning of each asset type under existing securities and commodity regulations:
· Digital Commodities: Core network native tokens, whose value depends primarily on the functionality of the crypto system and market supply and demand (e.g., mainstream public chain tokens), classified as commodities rather than securities.
· Digital Collectibles and Tools: NFTs, in-game assets, gas fee tokens, access tokens, generally not subject to securities rules unless fragmented or primarily marketed as investment products.
· Payment Stablecoins: Fiat and real-world asset collateralized payment stablecoins regarded as quasi-currency instruments, but those designed with yields or non-compliant features still need to undergo securities classification review.
· Digital Securities: Tokenized stocks, bonds, and credit-related real-world assets, whether on-chain or not, are fully categorized as securities. Staking, mining, wrapping: native staking, mining, airdrop, and wrapping activities do not constitute securities trading; however, combined staking, yield wrapping/structured tokens that promise returns to investors may be classified as investment contracts.
For further understanding of the new token classification framework, progress on the CLARITY Act negotiations, and global regulatory dynamics, refer to the latest published "Regulatory Overview" by Talos.
Conclusion
Although crypto asset prices continue to be significantly affected by macro and geopolitical factors, the underlying infrastructure of the industry continues to iterate. Bitcoin is gradually receiving support at its current price level, with on-chain platforms further penetrating the 24/7 trading market for stocks, commodities, and real-world assets.
At the same time, traditional giants like the NYSE and Nasdaq are actively engaging in tokenization, driving the modernization of the stock trading system. The progress of the CLARITY Act and regulatory policies related to stablecoin yields will become core variables for the industry; if the macro environment improves, risk appetite for crypto assets is expected to gradually recover.
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