Crypto grinding out a bottom as fundamentals diverge from price, Bitwise says

Bitwise contends that the crypto industry’s obsession with timing a market bottom overlooks a historical pattern where peak investor anxiety often signals the start of a recovery.

Having navigated the 2018 and 2022 winters, the crypto asset manager suggested the current “anxious feeling” in the market is a trailing indicator of historical recovery zones.

Bitwise CIO Matt Hougan noted that investors who bought the dip during the 2018 nadir saw returns of approximately 2,000%, while those who entered during the 2022 lows are up roughly 300% in just over three years. For those with a long-term horizon, the firm views the current disconnect between price and progress as a repeat of these specific cycles.

The global crypto market has faced a bruising start to 2026, with over $2 trillion in value wiped out since the October 2025 peak. Bitcoin BTC$70,435.96 recently plummeted to a 16-month low near $60,000, a psychological breach that triggered nearly $5.4 billion in leveraged liquidations over a single 72-hour window.

Analysts attributed the carnage to a perfect storm of macro headwinds: the nomination of Kevin Warsh as Federal Reserve Chair signaling a hawkish hard money shift, massive outflows from U.S. spot exchange-traded funds (ETFs) totaling billions, and a broader de-risking trend that has seen investors flee both digital assets and high-growth tech stocks.

The world’s largest cryptocurrency was trading around $68,800 at publication time.

According to the Friday blog post, the fundamental case for the asset class remains unchanged despite the price action.

Hougan argued that the world is increasingly digital and demands non-fiat currencies, pointing to the ascendancy of stablecoins, the rise of tokenization, and the emergence of prediction markets and “AiFi” as evidence of a maturing ecosystem.

He emphasized that while prices do not currently reflect this progress, Wall Street’s continued integration with blockchain technology suggests that fundamentals will eventually drive the next leg up.

Regarding a potential turnaround, Bitwise acknowledged that crypto bear markets typically end in exhaustion rather than a sudden burst of excitement. However, the asset manager identified several specific triggers that could serve as a catalyst for a recovery.

These include the potential passage of the CLARITY Act, a shift back toward risk-on market sentiment, rising interest rate-cut expectations, and technological breakthroughs at the intersection of AI and crypto. In the absence of a sudden positive shock, Bitwise expects the market to “grind out a bottom,” prescribing a strategy of patience and a focus on the long-term destination.

Read more: Deutsche Bank says bitcoin’s selloff signals a loss of conviction, not a broken market