The decentralized finance (DeFi) sector has the potential to pull the industry out of a prolonged correction, according to Bitwise Chief Investment Officer Matt Hougan.

“Bear markets present huge opportunities for those who are attentive. Right now, one is forming in DeFi,” the expert noted.

He stated that leaders in the segment have already become “serious businesses with real users.” Trading volumes on Uniswap regularly surpass those of Coinbase, and annual revenue for Aave exceeds $100 million.

Recent changes in the governance of leading protocols and an influx of institutional investments indicate strengthening fundamentals in the sector. Hougan believes these factors will be the main drivers of the next bull market.

“Crypto investors are tired of promises; they want to see real users, revenue, and value. DeFi fits this description perfectly,” he stated.

A New Phase for DeFi

Hougan highlighted a new governance proposal for Aave called Aave Will Win as a key event. Historically, DeFi tokens “have been poor investments.” Despite the growth of many decentralized platforms, their governance tokens have significantly declined:

  • AAVE's price has dropped by 50% over the past year;
  • UNI is trading at levels not seen in five years.

This weak performance is largely attributed to regulatory pressure. During the launch of many projects, the SEC took a hard stance, using the Howey Test to classify assets as securities.

To avoid scrutiny, developers intentionally stripped tokens of income rights. As a result, the market became flooded with “hollow” governance tokens that were economically disconnected from the success of the protocols themselves.

According to Hougan, the Aave Labs initiative changes the game. It proposes that all revenue from Aave-branded products will be directly funneled into the treasury of the DAO owned by token holders. The deal also transfers intellectual property rights and revises the incentive structure between developers and the community.

“Theoretically, every dollar of revenue from products will go to the DAO. It will decide how to use the funds—such as financing Aave development, buying back tokens, or creating reserves,” the expert emphasized.

In this scenario, AAVE will become the central economic asset of the ecosystem, while the development company will act as a service provider interested in the token's growth.

The initiative has sparked discussions in the community, but Hougan believes the trend towards strengthening tokenomics could transform the sector.

“Looking at the bigger picture, AAVE—the second-largest DeFi asset—is transitioning from a governance-only token to one where holders have a clear right to protocol revenues. If Aave can do this, so can other DeFi projects,” concluded the Bitwise CIO.

Pressure on the Altcoin Market

The alternative coin sector is facing tough times. Selling pressure has reached a five-year high, noted CryptoQuant contributor IT Tech.

Altcoin Sell Pressure Just Hit a 5-Year Extreme

“Retail is out. Smart money rotated. No institutional alt accumulation in sight. This is not a dip. It's 13 months of continuous net selling on CEX spot.” – By @IT_Tech_PL pic.twitter.com/xtu8MIK0Fd

— CryptoQuant.com (@cryptoquant_com) February 18, 2026

Over the past 13 months, the cumulative difference between buying and selling volumes of cryptocurrencies, excluding Bitcoin and Ethereum, has dropped by $209 billion.

In January 2025, demand and supply were balanced, with the indicator hovering around zero. However, since then, continuous net selling has been recorded on centralized spot exchanges. This decline occurs amid a correction of digital gold, which is trading around $67,500 at the time of writing.

The analyst highlighted structural changes in market participant behavior:

  • retail investors have exited altcoin positions;
  • “smart money” has rotated into other assets;
  • institutional interest in accumulating alternative coins has evaporated.

IT Tech believes that what is happening cannot be classified as a typical downturn. The indicators suggest not a bottoming out but a complete lack of buyers in the altcoin segment.

It is worth noting that Matrixport has recorded a depletion of Bitcoin selling pressure. According to them, sentiment in the crypto market has dropped to extreme lows.