TBW - The state of the digital assets market in Q4 2025

Key takeways

• October 10, 2025 marked a turning point for the digital asset market: a wave of liquidations exceeding $19 billion caused a lasting shock of confidence among investors.
• In the fourth quarter, digital assets underperformed all major asset classes. Bitcoin fell by 23.5%, Ethereum by 28.47%, and the crypto market as a whole by 32.51%, reflecting a widespread retreat from risk and a deterioration in liquidity.
• In contrast, gold emerged as the star asset of the quarter with a gain of 11.91%, while European equities outperformed their US counterparts, signalling a sectoral and geographical rotation of investment flows.
• Fundamentally, the signals are mixed: valuation multiples have tightened across the sector, while total locked-in value (TVL) in DeFi has fallen by more than 25%, highlighting a growing mismatch between market prices and on-chain economic activity.
• The momentum of stablecoins has also seized up. Their growth, a key driver of previous cycles, came to a complete halt in Q4.
• In this difficult environment, two ecosystems stood out positively: Tron and Solana, which showed relative resilience thanks to sustained transactional activity and better market depth than the rest of the sector.

The State of Bitcoin

The fourth quarter was the worst to date for Bitcoin ETFs in the US. Assets under management (AUM) fell from $133.56bn to $97.47bn, a 27% contraction, reflecting both the correction in the underlying and a net outflow of investors.

Over the quarter as a whole, flows were negative to the tune of $1.134bn. While BlackRock's IBIT continued to attract capital with $1.121 billion in net inflows, this momentum was not enough to offset the massive redemptions seen in other products, particularly Grayscale's GBTC (-1.11 billion) and ARK Invest's ARKB (-637.6 million).

Damage caused by long-term holders (LTHs)

In the fourth quarter, long-term holders made one of the biggest withdrawals ever seen. They reduced their exposure by around $178 billion, of which $112 billion corresponded to capital gains actually realised, and liquidated more than 1.4 million bitcoins.

This volume represents almost 7% of the circulating supply disposed of in the space of three months. An exceptional supply shock that exerted decisive selling pressure and contributed to a drop of around 30% in the bitcoin price over the period.

The best assets of the quarter

In the fourth quarter, almost all asset classes advanced, with the notable exception of digital assets. The reversal in sentiment was particularly marked, with a significant underperformance compared with traditional markets: Bitcoin fell by 23.5%, Ethereum by 28.47%, and the broad market index (TOTAL3) by 32.51%.

At the same time, gold emerged as the quarter's big winner with an 11.9% rise, confirming its role as a safe-haven asset in an uncertain environment. European equities also outperformed their US counterparts, reflecting a regional rotation of flows towards markets deemed more attractive over the period.

The state of the various L1s

Comparison of returns

The flash crash on 10 October had a lasting impact on all the main Layer 1 blockchains, which all ended the quarter in negative territory. The biggest falls were recorded by Avalanche (-59.69%), followed by Cardano (ADA), Sui (SUI) and Hedera (HBAR), reflecting the marked vulnerability of alternative L1s to liquidity shocks.

In this context, Tron stood out for its relative resilience: with a decline limited to -14.81%, it clearly outperformed its peers and established itself as the least penalising asset for portfolios exposed to L1s over the quarter.

Active users: Binance Smart Chain takes the lead

In the fourth quarter, Binance Smart Chain (BSC) emerged as the dominant chain in terms of activity, ahead of Solana. Both networks maintained robust user bases over the period as a whole, with a quarterly average of 58 million active addresses for BSC and 40.6 million for Solana, confirming their status as preferred platforms for mass on-chain usage.

At the other end of the spectrum, Hyperliquid showed notable momentum by doubling its active user base, signalling growing traction despite general market weakness. Conversely, Cardano recorded a marked contraction in activity, to the point where it fell to around 1,100 active users in the final week of the quarter, reflecting a clear drop-off in relative usage compared with the other major ecosystems.

Active developers: SUI, a favoured development hub

On the development front, Sui emerged as the most dynamic channel in the fourth quarter: it maintained an average of more than 200 active developers over the entire period, reflecting a sustained effort to engineer and extend its ecosystem.

The consumer-oriented blockchain segment also showed solid development activity (averaging around 200 active developers) but Ethereum only regained the lead in the final week of the quarter, suggesting a renewed effort at the end of the year rather than continued dominance.

In contrast, Hyperliquid concentrated the lowest number of active developers, highlighting a model that is still very tightly knit around a small team despite the growth in its usage.

Number of transactions: the absolute domination of Solana

As for the year as a whole, the fourth quarter saw no change in the networks' hierarchy in terms of transaction activity.

Solana once again clearly emerged as the most-used blockchain: it recorded 23.8 billion transactions over the quarter, a higher volume than all the other blockchains combined, confirming its status as the dominant platform in terms of throughput and actual usage.

At the other end of the spectrum, Cardano remained the least-used blockchain in terms of transactions, continuing a trend already observed in previous quarters.

On-chain fees: the reign of Tron

In terms of on-chain revenues, Tron regained its dominant position in the fourth quarter, collecting an average of $49 million in fees per week, confirming the strength of its transactional usage model.

Hyperliquid held on to second place despite a slight dip on the previous quarter, generating an average of $18.38 million in weekly fees. A level that remains significant given the relative size of its ecosystem.

In contrast, Cardano remained well behind on this criterion, with average fees of just $33,000 per week, highlighting a marked gap between its technological ambition and its current ability to monetise network activity.

Inflation and monetary dynamics of L1s

Q4 inflation

From the point of view of on-chain monetary policy, Hyperliquid stood out in the fourth quarter as the only channel that was almost systematically deflationary. With the exception of a temporary inflation spike of around 0.5% in week 48, the network maintained a dynamic of net token destruction, with an average burn rate of 0.11% per week, signalling a structural pressure to supply scarcity.

In contrast, Sui was the most expansionist channel over the period: it increased its circulating supply by 4.44% in Q4, reflecting a significant rate of issuance that mechanically dilutes existing holders and weighs on the supply-demand dynamic in the short term.

GDP on-chain: slowdown in economic activity

Despite its still dominant position in terms of nominal economic value generated on-chain, Ethereum did not escape the widespread slowdown in activity in the fourth quarter. All the major chains recorded a contraction in their "on-chain GDP" (total amount of fees generated by applications), over the period, (with the notable exception of TON, whose growth paradoxically coincided with the price correction).

More specifically, economic activity contracted by an average of 3.13% per week on Ethereum, 5.45% on Solana, 14.33% on Binance Smart Chain, 0.41% on Tron and 7.7% on Avalanche, reflecting a clear cooling in usage and revenue generated by the protocols.

Contrary to this trend, TON posted average growth of 0.33% per week, suggesting relative resilience (if not countercyclical dynamics) in its on-chain economy during the quarter.

Capital flows: Solana's steady victory

The introduction of the first Solana ETFs in the fourth quarter has profoundly altered the hierarchy of capital flows into digital assets. Solana led the way in net inflows, benefiting from steady inflows. This was interrupted by a single week of outflows to reach $1.488 billion in inflows over the quarter.

The momentum was much more moderate on Ethereum: despite its status as a benchmark asset for institutional investors, the network attracted just $270 million in net inflows, around one-sixth of the flows recorded by Solana.

At the bottom of the league table, SUI captured just $13 million over the period, illustrating the difficulty for emerging chains to raise significant allocations via regulated vehicles.

Offre de stablecoins par blockchain

In the fourth quarter, stablecoin supply continued to grow on most major Layer 1 blockchains, confirming that these assets remain the main vehicle for on-chain liquidity despite market weakness.

The largest increases were seen on Hedera (+31.44%) and TON (+25.45%) between the start and end of the quarter, a sign of the rapid rise of these ecosystems as digital dollar payment and settlement rails.

The more established networks posted more moderate but positive growth trajectories: +5.76% on Ethereum, +8.95% on Solana, +11.41% on Binance Smart Chain, +4.5% on Tron and +5.98% on Avalanche, reflecting a gradual expansion of stablecoin liquidity.

In contrast, Hyperliquid (-22.52%) and SUI (-47.30%) recorded a significant contraction in their stablecoin supply, a potentially worrying signal about the depth of their market and their ability to retain flows in times of stress.

TVL : érosion en cours

Total locked value (TVL) in DeFi fell sharply in the fourth quarter, from a peak of $156.8bn in October to $116.66bn at the end of the period, a marked contraction in on-chain activity.

All the major Layer 1 blockchains recorded a decline in their TVL, a movement closely correlated with the erosion of underlying asset prices, highlighting DeFi's high sensitivity to market conditions.

In this context, Ethereum retained a largely dominant position with 57.75% of overall L1 TVL, confirming its role as the central hub of decentralised finance despite the general downturn.

Also, the lack of significant growth in stablecoin supply in Q4 deprived the ecosystem of a key driver of liquidity, contributing to an overall 25.6% decline in TVL over the quarter.

Valuation of L1s

Price/Fee ratio: Tron wins, ADA loses

As the undisputed leader in on-chain fee collection, Tron appears to be the most discounted chain in the sector in Q4, with a price/fee ratio of just 10.97, significantly lower than its peers and closer to the multiples seen in utility-type models.

The rest of the market also has relatively low valuation levels compared with the revenues generated (with the notable exceptions of Hedera and Cardano, whose price/charge multiples come out at very high levels, suggesting a valuation disconnected from their current ability to monetise network usage).

It is important to note, however, that the sector average of this ratio also tightened in Q4, reflecting a general increase in relative valuations compared with the previous quarter, despite the contraction in activity and flows.

FDMC per active user: Tron and Solana in the lead

On the criterion of fully diluted valuation per active user, Tron and Solana emerge as the most reasonably valued networks of the quarter, with a slight advantage for Tron at $1,615 FDV per active user, compared with $2,459 for Solana. These levels suggest a better alignment between usage base and market valuation than for most of the other L1s.

In contrast, Cardano again emerges as an extreme case, with a valuation per user that is much higher than the rest of the sector, raising questions about the sustainability of its multiples in relation to its actual business.

As with the price/expense ratio, the sector average tightened in Q4, with valuations per user up across the market despite the decline in activity and prices.

FDMC per transaction: Solana wins, ADA loses (again)

On the criterion of fully diluted valuation per transaction (FDV/transaction), Solana clearly stands out as the most efficient network of the quarter. Its average valuation came to just $1.03 per transaction, a level extremely below the sector average of $993.23 fully diluted capitalisation per transaction, reflecting a particularly favourable alignment between intensity of use and market valuation.

Behind Solana, Tron, SUI, TON and Avalanche also show controlled ratios, all below $20 FDV per transaction on average, indicating a relatively consistent relationship between actual activity and network price.

In contrast, Cardano again emerges as the most marked exception, with a ratio reaching $8,849 per transaction, signalling a valuation that is very disconnected from its actual usage volume.

Status of the stablecoin market

The growth of stablecoins clearly lost momentum in the fourth quarter. Total supply remained virtually unchanged over the period as a whole: USD297.09 billion at the start of the quarter compared with USD297.22 billion at the end, reflecting a lack of net creation of on-chain liquidity.

The dynamics by issuer reflect this stagnation. USDT was up just 2.73%, while USDC was down 0.97%, confirming that marginal demand for tokenised dollars remained sluggish despite the clearer regulatory environment in the US.

The case of Ethena's USDe is particularly telling: the token lost more than 50% of its supply in circulation in Q4 following the flash crash on 10 October, without since recovering its previous level, highlighting the fragility of certain synthetic return models backed by the derivatives market.

Although the GENIUS Act has now entered the implementation phase, the stablecoin market has not benefited from an immediate regulatory ripple effect. Instead, it has come under pressure from the wider slowdown in the crypto ecosystem, where a lack of new flows and risk aversion have limited the creation of digital dollar liquidity.

Q4's big winners

In the fourth quarter review, Tron emerged as the most robust channel, narrowly beating Solana in a multi-criteria reading.

Tron dominated on the key dimensions of economic and financial performance: best relative price performance (most limited drawdown), leadership on fees collected, most attractive price/fee ratio and fully diluted valuation per active user most consistent with its level of usage.

For its part, Solana has clearly taken the lead in two structuring areas: trading volume, where it remains unrivalled, and capital flows, driven by the launch of its ETFs, which have redefined institutional allocation over the period.

The other major chains achieved more one-off victories: BSC, SUI, TON, Ethereum and Hyperliquid stood out in only one category each, reflecting specific strengths but with no cross-sectional dominance across all metrics in the quarter.

The Big Whale's view

Q4 2025 was the low point of the year for digital assets. All fundamental metrics (performance, usage, on-chain liquidity and valuation) contracted simultaneously, reflecting an effective market shift to a bearish regime. From a strictly allocative point of view, the asset class has not been remunerative over the period compared with more resilient alternatives.

One nuanced element is worth highlighting, however: the deterioration in fundamentals (TVL, on-chain economic activity, stablecoin supply, valuation multiples) has been less brutal than the price correction. This divergence suggests a partial disconnect between the intrinsic value of the sector and market prices, rather than a systemic collapse in the underlying uses.

More broadly, the quarter was a reminder of a structural reality: the crypto ecosystem does not yet have sufficient depth of liquidity to simultaneously support all assets in times of stress. In an environment of extreme stock picking, global investors have favoured traditional assets perceived as less risky (notably precious metals and AI-related stocks) at the expense of digital assets.

With the pullback to 2025, Bitcoin and some of the altcoins have enjoyed a solid trajectory, particularly in the second and third quarters. Nevertheless, the sector still needs to gain structure, maturity and consolidation for quality assets to emerge sustainably and become obvious components of global institutional portfolios.

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