Written by: Tanay Ved , Coin Metrics

Compiled by: Chopper, Foresight News

TL;DR

• Amidst a volatile macroeconomic and geopolitical environment, the crypto market continues to face pressure, but ETF demand has gradually improved this quarter, providing support for Bitcoin's current price level.
• On-chain trading platforms and asset tokenization are further driving traditional assets into the 24/7 trading market. The stock and index perpetual contracts launched by platforms such as Hyperliquid, as well as the new stock perpetual products added by mainstream exchanges, are driving a steady increase in open interest.
• The total supply of stablecoins has remained stable at around $300 billion, and the adjusted transaction volume is expected to climb to approximately $21.5 trillion in the first quarter of 2026. Regulatory policies related to stablecoin yields and issuance are becoming clearer and continue to influence the industry's development.

The first quarter of 2026 has concluded, making it a crucial time to review the dynamics and core themes of the crypto market. This quarter saw a mix of geopolitical and macroeconomic uncertainties, resulting in a market characterized by risk aversion and high volatility. Despite challenges to the crypto market, with a total market capitalization decline of approximately 22%, areas such as tokenized stocks and on-chain trading of traditional assets emerged as bright spots, with substantial progress made in industry infrastructure. This article will review the first quarter of 2026, analyzing the trends and core themes that shaped the market during this period.

Market performance

Bitcoin's price fell more than 30% in February from approximately $95,000, and has dropped 22% year-to-date. In addition to macroeconomic pressures, widespread selling of risk assets and liquidation in the derivatives market exacerbated the decline, reigniting discussions about Bitcoin's safe-haven and store-of-value properties.

However, since the outbreak of the conflict in Iran on February 28, Bitcoin has outperformed stocks and gold, demonstrating resilience and signs of a rebound in demand.

Data source: Coin Metrics and Google Finance

The performance of crypto assets is highly differentiated, with only a few altcoins with strong narratives and real-world usage growth outperforming the market.

Outstanding tokens include Hyperliquid (HYPE), Bittensor (TAO), and Morpho (MORPHO), all with quarterly gains exceeding 30%. Hyperliquid benefited from the growth of the HIP-3 market (especially commodities and stock index categories), expanding its business from crypto assets to more asset classes; Bittensor and Morpho, on the other hand, relied on the growth of artificial intelligence infrastructure and decentralized finance lending, respectively, as institutional attention to decentralized AI and vault management businesses continued to increase.

Data source: Coin Metrics

Bitcoin demand gradually stabilizes

The risk aversion that emerged at the beginning of the quarter reversed in March. Despite lingering signs of market weakness, demand for Bitcoin spot ETFs improved significantly, reversing the continuous outflows that had been ongoing since November 2025. 30-day rolling data shows a net inflow of over 30,000 Bitcoins into ETFs, supporting Bitcoin's consolidation around $70,000.

Data source: Coin Metrics Network

Whether this demand can be sustained and accelerated largely depends on the macroeconomic environment and policy direction. Easing geopolitical risks, slowing inflation, the return of expectations for interest rate cuts, and continued growth in demand for ETFs and crypto asset treasuries (DAT) (including Strategy's $42 billion Bitcoin fundraising plan) are all expected to further solidify capital inflows.

24/7 On-Chain Markets and Tokenized Stocks

Hyperliquid and Traditional Asset Tracks

One of the key trends this year is the accelerated integration of traditional financial markets and 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 the launch of the HIP-3 market, which covers stocks, indices, and commodities, Hyperliquid saw a significant increase in the proportion of non-crypto asset trading volume to approximately 45% this quarter. Driven by geopolitical conflicts, traders sought 24/7 exposure to assets such as metals and crude oil, resulting in a substantial increase in overall trading volume and open interest on the platform; among these, open interest in traditional assets under the HIP-3 platform accounted for approximately 28% of the total.

Data source: Coin Metrics

The Rise of Stock Perpetual Contracts

In this segment, mainstream stocks and indices have become the fastest-growing category as trading platforms continue to expand their businesses. Kraken launched xStocks perpetual contracts in February, and Coinbase launched perpetual stock products on its international platform, providing investors with leveraged exposure to US stocks. Meanwhile, 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

Hyperliquid's open interest in stock and index perpetual contracts is steadily increasing, with core indices such as the XYZ100 (Nasdaq 100) and S&P 500 becoming the trading categories with the largest open interest on the platform. Individual stocks such as Nvidia (NVDA) and Micron Technology (MU) are also generating considerable liquidity.

At the same time, the issuance of tokenized stocks and funds has grown 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 have shown an upward trend.

The growth of tokenized stocks and real-world asset (RWA) perpetual contracts confirms a trend: on-chain platforms are gradually becoming a 24/7 extension of traditional markets, rather than simply crypto-native trading venues.

Stablecoins: Stable supply, continuously improving utility

Stablecoins continue to play a cornerstone role in on-chain liquidity. Despite the overall market downturn, the total supply of stablecoins remained stable at around $300 billion in the first quarter of 2026, with a slight rebound in supply growth on February 30.

The most notable growth among stablecoins was USDS, a USD-pegged stablecoin issued by Sky Protocol (formerly MakerDAO) and backed by both crypto and real-world assets, with its supply increasing by 43% to approximately $8 billion. USDC, issued by Circle, reached $77 billion, while USDT remained stable at around $184 billion.

Data source: Coin Metrics

While supply remained stable, the velocity of circulation and usage of stablecoins increased significantly. The adjusted total transaction volume of stablecoins reached $21.5 trillion in the first quarter, approximately three times that of the same period in 2025. Over 80% of this transaction volume came from USDC, whose usage share continued to expand compared to USDT. This activity was primarily driven by USDC on the Base Chain, which alone saw a transaction volume of $13 trillion in the first quarter.

As we analyzed in our recent report, a large portion of these fund flows come from DeFi infrastructure activities such as liquidity provider rebalancing and flash loans, rather than end-user payments or settlements, although the latter scenarios are also growing in tandem.

Data source: Coin Metrics

The future direction of the stablecoin industry may depend on its reward mechanisms and issuance rules. The latest draft of the CLARITY Act proposes prohibiting passive income from stablecoin balances but allowing activity-based rewards linked to payments and platform usage. This provision could change the business models of key participants.

For Coinbase, where stablecoin revenue already accounts for over 25% of total revenue, limiting USDC yields could weaken its ability to attract and retain funds. Circle, on the other hand, will be less affected; if the high-interest-rate environment persists and regulatory rules become clearer, its payment and transaction-related revenues are expected to benefit. As the legislation progresses, its impact on DeFi lending, yield-generating stablecoins, and tokenized government bonds warrants continued attention.

The U.S. Securities and Exchange Commission (SEC) has released a digital asset classification framework.

This quarter saw a significant and clear signal from the regulatory front. The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) jointly released an explanatory document, introducing a five-category classification framework for digital assets and clarifying the positioning of each asset class under existing securities and commodity regulations.

• Digital goods: Core network native tokens, whose value mainly depends on the functions of the encryption system and market supply and demand (such as mainstream public chain tokens), are classified as commodities rather than securities.
• Digital collectibles and tools: NFTs, in-game assets, gas fee tokens, access tokens, generally do not fall under securities rules unless they are fragmented or primarily marketed as investment products.
• Payment stablecoins: Payment stablecoins backed by fiat currency and real-world assets are considered money-like instruments, but those with yields or non-compliant designs still need to be subject to securities certification review.
• Digital securities: Tokenized stocks, bonds, credit-related real-world assets, etc., whether or not they are on-chain, all fall under the category of securities.
• Staking, mining, and encapsulation: Native staking, mining, airdrops, and encapsulation are not considered securities transactions. However, collective staking, yield encapsulation/structured tokens, if they make a profit promise to investors, may be considered investment contracts.

For a deeper understanding of the new token classification framework, the progress of the CLARITY Act negotiations, and global regulatory developments, please refer to Talos's latest Regulatory Overview .

Conclusion

While crypto asset prices remain significantly influenced by macroeconomic and geopolitical factors, the industry's underlying infrastructure continues to evolve. Bitcoin is gradually finding support at current price levels, and on-chain platforms are further penetrating the 24/7 trading markets for stocks, commodities, and real-world assets. Meanwhile, traditional giants like the NYSE and Nasdaq are actively pursuing tokenization, driving the modernization of their stock trading systems. The progress of the Clarity Act and regulatory policies related to stablecoin yields will be key variables for the industry; if the macroeconomic environment improves, risk appetite for crypto assets is expected to gradually recover.