Source: TheDeFiReport
Original title: Crypto Landscape Health Check
Compiled and edited by: BitpushNews
We are now in the 5.5th month of the latest “crypto winter”.
The tide has receded. The animal spirits (speculative frenzy) have dissipated. The tourists have all left.
Naturally, now is the time to roll up our sleeves and get to work. Because a bear market is when the difference between wheat and chaff (quality and quality) is truly revealed.
This is a time for clear judgment and the formation of beliefs.
In this report, we will analyze a set of data charts to assess the health of the crypto ecosystem and the trends we believe are shaping the next wave of expansion.
Let's begin.
Total market capitalization of cryptocurrencies
Current breakdown of the percentages for each major category:
BTC: 57%
L1s: 25%
Stablecoins : 14%
DeFi: 2%
Other: 2%
Note: Stablecoins and DeFi categories generated more revenue than L1 – highlighting the persistent monetary premium that L1 still receives from market participants.
As shown in the chart above, the current total market capitalization of cryptocurrencies is $2.4 trillion – a 45% drop from the peak ($4.4 trillion), which is roughly in line with what we saw when the last bear market lasted 5.5 months, when it dropped by 40%.
Key points
If the decline in total market capitalization is consistent with the relative decline between the peak and trough in 2018 and 2022, we could see the total market capitalization of crypto fall by 62% from its peak to $1.67 trillion (a further 30% drop from current levels).
In the '22 bear market, the decline accelerated five months after stablecoin supply peaked and began to fall. We are currently in a similar phase of the cycle, as stablecoin supply hit a local high on March 16, roughly five months into the bear market, which will be discussed in more detail later.
Finally, BTC's dominance typically declines during bear markets (it was 38% at the bottom in '22). Currently, that figure is 57%. We expect a more moderate decline in this bear market.
Why?
In this cycle, there are fewer novel and exciting use cases because venture capitalists (VCs) have clearly realized that blockchain is best suited for finance and payments. This reduces the amount of capital that might flow to non-BTC crypto assets.
For this reason, when the market peaked in October, BTC held a 60% market share. In contrast, at the market peak in 2021, BTC's market share was only 43%.
spot market
Key points
Total spot trading volume (DEX + CEX) is currently down 70% from its peak in early Q4 of last year. CEX trading volume is down 71%, and DEX trading volume is down 67%.
CEX spot trading volume is currently 1.5 times higher than the low point in early 2003. DEX trading volume is currently 9.1 times higher than the low point in early 2003.
DEX trading volume currently accounts for approximately 25% of CEX trading volume—up from about 5% in 2002. Uniswap leads with a 38% market share, followed by Meteora (Solana) at 22%. Pancakeswap (BNB Chain) is third with 15%. The most interesting development in the DEX space over the past year has been the rise of private DEXs on Solana—currently accounting for 53% of Solana DEX trading volume. HumidiFi is the leading private DEX, currently holding a 3% share of all DEXs.
Binance still dominates the CEX spot market with a 39% market share. MEXC (11%), Gate.io (8%), Bybit (8%), OKX (7%), and Coinbase (7%) are all in a "lower" tier than Binance.
The percentage of spot DEX trading volume to spot CEX trading volume
in conclusion
DEXs continue to gain market share from CEXs during the current bear market. This is also an indicator that the current active users are "crypto-native"—something we expect to see at this stage of the cycle.
What's even more interesting is that DeFi protocols, as a category, generate more revenue than Layer 1 blockchains, but only account for 2% of the total market capitalization of crypto today (L1 accounts for about 80%).
Currently, several DEXs listed in The Watch List are trading within our "fair value" and "deep value" ranges.
CEX + DEX trading volume as a percentage of Nasdaq trading volume
One of the less-reported events in the previous cycle was during the “meme frenzy” in January of last year, when cryptocurrency trading volume put pressure on Nasdaq – at that time, crypto trading volume increased nearly threefold to $90 billion per day (accounting for 90% of Nasdaq’s trading volume at the time).
Today, the trading volume generated in the crypto market is approximately 20% of that in Nasdaq.
Perpetual Contracts Market
Trading volume
Key points
Total trading volume for perpetual contracts is currently down 63% from the peak reached in the fourth quarter of last year. CEX perpetual contract volume is down 57%, and DEX perpetual contract volume is down 84%.
The trading volume of perpetual contracts is currently four times that of daily spot trading, highlighting their appeal to retail traders.
DEX perpetual contract trading volume currently accounts for 9.3% of CEX perpetual contract volume, up from 4% at the beginning of 2025.
Hyperliquid currently accounts for approximately 60% of DEX trading volume and 4.6% of total (DEX + CEX) perpetual contract trading volume.
In terms of CEX perpetual contract trading volume, Binance is the leader this year with a 43% share. OKX accounts for 20%, followed by Bybit and Gate (13%), and Coinbase International (5%).
Stablecoins
Everyone is bullish on stablecoins, and so are we. Supply has increased by $192 billion over the past 2.5 years (to $333 billion now). However, we also believe this chart may have peaked for now.
Why?
In the '21-year cycle, the stablecoin supply peaked on April 1, 2022 (nearly 5 months after BTC peaked, and after stabilizing for more than 3 months. USDC did not peak until July '22).
In the current cycle, we will reach a local peak on March 16, 2026 (also 5 months after BTC peaked).
We have been stagnant for 5 months for the following reasons:
Funds flowing into cryptocurrencies have stagnated (the market is in a state of "risk aversion").
Leverage is being de-leveraged (real-world payments still account for only a small portion of stablecoin transactions).
Reflexivity returns in DeFi are declining (there are no longer incentives to hold stablecoins given on-chain risks).
So far, we have only seen a slowdown in growth (supply has remained flat for 5 months).
In our view, the next stage is fiat currency redemption.
After peaking in April 2022, it took stablecoin supply 2.5 years to regain that level. No one expected this to happen again in this cycle (due to regulatory reasons). However, regulation does not create demand for stablecoins in a "risk-averse" environment.
Key points
Regulation alone will not create new use cases, applications, bankable stablecoins, or new payroll solutions. These will come later.
Furthermore, the GENIUS Act prohibits stablecoin issuers from sharing profits with holders. This may benefit the business models of Circle and Tether, but it does not help cryptocurrency end-users.
Based on this, we believe that regulation (under the existing structure) will benefit offshore "yield-generating stablecoins" such as Ethena's USDe in the next round of market expansion.
Finally, Tether recently hired KPMG, one of the Big Four accounting firms, as its auditor. This move appears to align with the company's hints of an IPO. We also expect Tether to launch a US-compliant stablecoin and seek to build services around it.
It's unclear what these services will be. However, our view is that the winner of the stablecoin race will emerge victorious by wrapping their stablecoins in "sticky services." This could be payroll management, payments, remittances, and e-commerce, or it could be lending and banking services.
New trading tokens and trading app revenue
New transaction tokens on various chains
Key points
In every crypto cycle, a new "use case" emerges to help new users enter the crypto space. In the past cycle, it was the rise of launchpads on Solana and the ensuing meme trading.
Many people have a strong speculative demand for meme coins. We believe that's a mistake. Our approach is simply to observe the market. We believe there's a product/market fit (PMF) here because there's a market demand for "gamified" experiences offered by top-tier applications.
The number of new token transactions has now decreased by 53% from its peak in early 2025.
Solana (via Pump Fun) currently holds an 83% market share, followed by Base at 10%.
Pump Fun (one of the most profitable apps in the last cycle) has shown relatively stable revenue during the bear market. Currently, the app generates approximately $1.2 million in daily revenue across Launchpad, DEX, and Padre (trading apps). At its peak in the last cycle, it generated approximately $2.9 billion in daily revenue.
We believe meme coins and trading applications will not disappear. More information about the latter is below.
Transaction application revenue
Key points
Trading bots/applications were among the most successful applications of the last cycle. At one time, they generated over $10 million in revenue daily. Total revenue has now declined by 94% from its peak in early 2025.
In early 2025, Axiom emerged as a dark horse, capturing a significant market share by integrating wallet, transaction, and social experiences into a user-friendly interface (while leveraging the underlying decentralized infrastructure).
Axiom (with first-quarter revenue of $34 million) currently holds a 68% market share in this category. Padre (acquired by Pump Fun) comes in second with 18%.
We believe that the crypto trading experience built by Axiom is the ultimate "crypto game." In our view, this is essentially what speculative meme trading is all about.
With Pump Fun launching Pump Swap (DEX) last year and acquiring Padre (a trading app), it’s clear they’re trying to have the entire end-to-end experience in the space.
365-day L1 Base Fee vs Pump Fun Fee
Key points
Value is clearly moving up the technology stack, and we're seeing many applications launched by small teams rapidly scale to hundreds of millions of dollars in revenue. We expect this trend to continue in the next round of market expansion, as top-tier L1 now has the infrastructure and distribution capabilities to help the best builders launch and scale quickly.
Summary and Reflection
The market is down. Mood is bad. The young players are resting, and the tourists have returned to their normal lives.
In other words, the tide has receded.
That's why now is the best time to analyze the market.
Most crypto assets will never return to their all-time highs. But at the same time, the next 10-20x opportunity lies hidden in plain sight. Oversold, forgotten.
Until it erupts again.
That's why we're actively conducting some of the most important research. We're doing this now to prepare for the next "fat pitch."
