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    3. Q1 Market Review: Traditional Assets Enter the Blockchain Era; Geopolitical Turbulence Puts Pressure on the Cryptocurrency Market

    Q1 Market Review: Traditional Assets Enter the Blockchain Era; Geopolitical Turbulence Puts Pressure on the Cryptocurrency Market

    By: blockbeats|2026/04/02 05:00:10
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    Original Title: Q1 2026 Review: Crypto Markets Reset as Traditional Assets Go 24/7
    Original Author: Tanay Ved, Coin Metrics
    Translated by: Chopper, Foresight News

    TL;DR

    · Amid macroeconomic and geopolitical turbulence, the crypto market remained under pressure, but ETF demand improved gradually this quarter, providing support for Bitcoin's current price.

    · On-chain trading platforms and asset tokenization further facilitated the entry of traditional assets into 24/7 trading with platforms like Hyperliquid launching stock and index perpetual contracts, along with mainstream exchanges introducing stock perpetual products, driving the steady growth of open interest.

    · The total stablecoin supply remained around $300 billion, with the first quarter of 2026 seeing a rise in transaction volume to around $21.5 trillion post-adjustment; regulatory policies related to stablecoin revenue and issuance have gradually become clearer, continuing to impact the industry's development.

    The first quarter of 2026 has come to a close, marking a key moment to review the development dynamics and key themes of the crypto market. This quarter, amid geopolitical and macroeconomic uncertainties, the market exhibited a risk-off, high-volatility nature. Despite challenges faced by the crypto market, with the total market capitalization falling by around 22%, areas such as tokenized stocks and on-chain trading of traditional assets stood out as industry highlights, with significant progress made in industry infrastructure. This article will review the first quarter of 2026, dissecting the trends and key themes that shaped the market in that quarter.

    Market Performance

    In February, Bitcoin's price dropped over 30% from around $95,000, resulting in a 22% year-to-date decline. Apart from macroeconomic pressures, a general sell-off of risk assets and derivatives market liquidation exacerbated the downturn, reigniting discussions about Bitcoin's safe haven properties and store of value function.

    However, since the outbreak of the Iran conflict on February 28, Bitcoin has shown more strength compared to stocks and gold, demonstrating some resilience and signs of demand recovery.

    Q1 Market Review: Traditional Assets Enter the Blockchain Era; Geopolitical Turbulence Puts Pressure on the Cryptocurrency Market

    Data Source: Coin Metrics and Google Finance

    The performance of crypto assets has shown significant differentiation internally, with only a few meme coins demonstrating strong narratives and real-world adoption outperforming the market.

    Notable performers include Hyperliquid (HYPE), Bittensor (TAO), and Morpho (MORPHO), all seeing quarterly gains of over 30%. Hyperliquid benefited from the HIP-3 market's growth (especially in the commodities and stock index categories), expanding its business scope from crypto assets to more asset classes; Bittensor and Morpho leveraged the growth in AI infrastructure and decentralized finance credit markets, with institutional interest in decentralized AI and treasury management businesses continuing to rise.

    Data Source: Coin Metrics

    Bitcoin Demand Slowly Stabilizing

    Early in the quarter, risk-off sentiment reversed in March. Despite lingering market weakness, demand for Bitcoin spot ETFs significantly improved, reversing the trend of continuous outflows since November 2025. Rolling 30-day data shows net inflows into ETFs exceeding 30,000 BTC, supporting Bitcoin's consolidation around $70,000.

    Data Source: Coin Metrics Network

    The sustainability and acceleration of this demand largely depend on the macro environment and policy direction. Geopolitical risks easing, inflation slowing, rate cut expectations returning, and the continued growth in ETF and Digital Asset Treasury (DAT) allocations (including a $42 billion Bitcoin fundraising plan by institutional strategies), are all poised to further consolidate inflows.

    -- Price

    --
    --
    --

    Round-the-Clock On-Chain Markets and Tokenized Stocks

    Hyperliquid and Traditional Asset Race

    One of this year's core trends is the fusion of traditional financial markets with on-chain infrastructure through asset tokenization and round-the-clock trading acceleration. The growth of perpetual contracts for traditional asset classes is the most tangible manifestation of this trend.

    Following the launch of the HIP-3 market covering categories such as stocks, indices, and commodities, Hyperliquid saw the non-crypto asset trading volume share increase significantly to about 45% this quarter. Amid geopolitical conflicts, traders sought round-the-clock exposure to metals, oil, and other assets, leading to significant growth in overall platform trading volume and open interest contracts; among them, traditional asset open interest contracts in HIP-3 accounted for approximately 28% of the platform's total.

    Data Source: Coin Metrics

    The Rise of Stock Perpetual Contracts

    In this subsector, as trading platforms continue to expand their businesses, mainstream stocks and index products have become the fastest-growing category. Kraken launched xStocks stock perpetual contracts in February, and Coinbase's international site introduced stock perpetual products, providing investors with exposure to U.S. stocks with leverage.

    At the same time, the largest HIP-3 deployment partner of Hyperliquid [XYZ] collaborated 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

    The open interest of stock and index perpetual contracts on Hyperliquid has been steadily increasing, with core indices such as XYZ100 (Nasdaq 100) and the S&P 500 ranking among the platform's largest open interest trading categories, and individual stocks such as Nvidia (NVDA) and Micron Technology (MU) also providing significant liquidity.

    Meanwhile, tokenized stocks and fund issuance have grown in parallel, from frameworks like xStocks to institutions issuing tokenized currency market funds and stock funds on Ethereum and Solana, showing a growth trend.

    The growth of tokenized stocks and Real World Asset (RWA) perpetual contracts confirms a trend: on-chain platforms are gradually becoming a round-the-clock extension of traditional markets, rather than just crypto-native trading venues.

    Stablecoins: Stable Supply, Increasing Utility

    Stablecoins continue to play a role as the foundation of on-chain liquidity. Despite an overall market decline, the total supply of stablecoins remained stable around $300 billion in the first quarter of 2026, with a slight increase in supply growth on February 30.

    The most prominent growth in stablecoins is seen in USDS, which is a dollar-pegged stablecoin issued by Sky Protocol (formerly MakerDAO) collateralized by crypto assets and Real World Assets, with a supply growth of 43% to around $8 billion; Circle's USDC has reached a scale of $77 billion, while USDT remains stable at around $184 billion.

    Data Source: Coin Metrics

    While supply remains stable, the circulation speed and usage of stablecoins have increased significantly. In the first quarter, the adjusted total transfer volume of stablecoins reached $21.5 trillion, about three times that of the same period in 2025. Over 80% of the transaction volume came from USDC, whose transaction usage share continues to expand compared to USDT. This high level of activity is mainly driven by USDC on the Base chain, with the transfer volume on that chain alone reaching $13 trillion in the first quarter.

    As we analyzed in a recent report, a large part of this fund flow comes from DeFi infrastructure activities such as liquidity provider rebalancing and flash loans, rather than end-user payments or settlements, although the latter scenario is also growing concurrently.

    Data Source: Coin Metrics

    In the future, the direction of the stablecoin industry may depend on the revenue mechanism and issuance rules. The latest draft of the "CLARITY Act" proposes to prohibit passive income generation from stablecoin balances but allows for activity-based rewards linked to payments and platform usage. This provision may alter the business models of key stakeholders.

    For Coinbase, where stablecoin revenue accounts for over 25% of total revenue, restricting USDC income could weaken its ability to attract and retain funds; Circle, on the other hand, is relatively less affected, and if the high-interest-rate environment persists and regulatory rules are clear, its payment- and transaction-related revenue may benefit. As the bill progresses, its impact on DeFi lending, yield-generating stablecoins, tokenized government bonds, and other areas is worth monitoring.

    U.S. SEC Releases Digital Asset Classification Framework

    This quarter saw a significant clarification on the regulatory front. The U.S. SEC and the Commodity Futures Trading Commission (CFTC) jointly released an interpretation document introducing a five-category digital asset classification framework and clarifying the positioning of each type of asset under existing securities and commodities regulations:

    · Digital Commodities: Core network-native tokens whose value primarily relies on cryptographic system functionality and market supply and demand (such as mainstream public chain tokens), classified as commodities rather than securities.

    · Digital Collectibles and Tools: NFTs, In-Game Assets, Gas Fee Tokens, Access Rights Tokens, generally not subject to securities rules unless fractionalized or primarily marketed as investment vehicles.

    · Payment Stablecoins: Fiat-backed or real-world asset-backed payment stablecoins are considered a form of monetary tool, but variants with yield or non-compliant design still need to undergo securities identification.

    · Digital Securities: Tokenized stocks, bonds, real-world asset-backed securities, and similar tools, whether on or off-chain, all fall squarely within the securities category. Staking, Mining, Wrapping: Native staking, mining, airdrops, and wrapping activities do not constitute securities transactions, but pooled staking, yield wrapping/structured tokens that offer investors return commitments could potentially be deemed investment contracts.

    If you want to delve deeper into the new token classification framework, progress on the CLARITY Act negotiations, and global regulatory trends, you can refer to Talos's latest release of the Regulatory Roundup.

    Conclusion

    Despite cryptocurrency prices still being significantly impacted by macro and geopolitical factors, the industry's underlying infrastructure continues to evolve. Bitcoin is gradually gaining support at current price levels, and on-chain platforms are further penetrating into the all-weather trading market of stocks, commodities, and real-world assets.

    Meanwhile, traditional giants like the NYSE and NASDAQ are actively entering the tokenization space, driving the modernization of the stock trading ecosystem. The progress of the CLARITY Act and regulatory policies related to stablecoin yields will become key variables for the industry; if the macro environment improves, the risk appetite for cryptocurrency assets is expected to gradually recover.

    Original Article Link

    This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.

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    Contents

    TL;DR
    Market Performance
    Bitcoin Demand Slowly Stabilizing
    bittensor
    Round-the-Clock On-Chain Markets and Tokenized Stocks
    Hyperliquid and Traditional Asset Race
    The Rise of Stock Perpetual Contracts
    Stablecoins: Stable Supply, Increasing Utility
    U.S. SEC Releases Digital Asset Classification Framework
    Conclusion

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