Bitwise CIO Warns Market Is Facing A ‘Full-Bore’ Crypto Winter, Not A Pullback

Overview

Bitwise Chief Investment Officer Matt Hougan has shared a comprehensive analysis of the current state of the cryptocurrency market, asserting that the industry has been in a bear market for over a year. His report highlights that the downturn began as early as January 2025, despite positive developments in institutional adoption and regulatory progress.

Deep Bear Market Driving Crypto?

In his recent post on social media platform X, Hougan challenged the notion that the recent price declines represent a typical pullback or short-term dip. He characterized the current market conditions as a “full-scale crypto winter,” drawing comparisons to previous downturns in 2018 and 2022. Hougan illustrated the severity of the situation by likening it to a “2022-like, Leonardo-DiCaprio-in-The-Revenant-style” winter, which he attributes to the excessive leverage accumulated during the previous market cycle and significant profit-taking by long-term cryptocurrency holders.

Addressing a pressing question among investors regarding the ongoing price declines despite a series of positive developments, Hougan acknowledged the increasing institutional involvement, improving regulatory landscapes, and broader adoption of cryptocurrencies as long-term positives. However, he emphasized that such factors often hold little weight during the most severe phases of a bear market. According to him, crypto winters are characterized by a general disregard for good news, regardless of its significance. Notably, even major developments like aggressive hiring by Wall Street firms or increased exposure to cryptocurrencies by significant financial institutions such as Morgan Stanley are unlikely to catalyze a market rally in the immediate future.

Hougan also referenced market sentiment indicators, noting that the Crypto Fear and Greed Index remains at historically high levels of fear. This observation is particularly striking given the recent public support for Bitcoin from the newly appointed Federal Reserve chair, highlighting a significant disconnect in market sentiment.

Historical Context and Market Sentiment

Drawing from historical cycles, Hougan pointed out that crypto winters typically last around 13 months. For instance, Bitcoin reached its peak in December 2017 and bottomed out a year later, while it peaked again in October 2021 before hitting its low point in November 2022. Based on this pattern, the current cycle might indicate further challenges ahead, especially since Bitcoin peaked again in October 2025. However, Hougan contended that focusing solely on the peak date overlooks an essential detail: the current bear market began in January 2025 but was obscured by significant institutional inflows.

He highlighted that strong demand from exchange-traded funds (ETFs) and Digital Asset Treasuries (DATs) masked the underlying weakness across much of the crypto market. During the analyzed period, ETFs and DATs purchased over 744,000 BTC, generating substantial buying pressure. Hougan suggested that without this institutional support, Bitcoin’s price could have seen a decline of approximately 60%.

Despite the prevailing market conditions, Hougan indicated several potential catalysts that could improve sentiment and signal the beginning of a recovery. These include robust global economic growth that could restore risk appetite, progress on regulatory initiatives such as the CLARITY Act, early signs of sovereign adoption of Bitcoin, or simply the passage of time. Reflecting on his experience through various crypto market cycles, he noted that the current atmosphere of despair and fatigue closely mirrors the final stages of previous crypto winters.

From author

Matt Hougan’s analysis serves as a stark reminder of the cyclical nature of the cryptocurrency market. His insights into the current bear market and its potential implications for investors highlight the need for caution amid optimism surrounding institutional adoption and regulatory advancements. Understanding these dynamics is crucial for navigating the complexities of the crypto landscape.

Impact on the crypto market

• The current bear market is characterized by excessive leverage and profit-taking by long-term holders.
• Institutional support has been significant but may mask underlying market weaknesses.
• Market sentiment remains negative, as evidenced by high levels of fear in the Crypto Fear and Greed Index.
• Historical patterns suggest that crypto winters typically last around 13 months, indicating potential challenges ahead.
• Positive developments in regulation and global economic conditions could serve as catalysts for recovery.