Bitwise: Bitcoin’s cycle lows are rising each cycle, institutional investors are buying the dip

BlockBeats, July 10 - Bitwise Senior Investment Strategist Juan Leon stated that the current Bitcoin bear market is fundamentally different from previous cycles, with institutional adoption increasing, while the market is also influenced by the AI boom, macroeconomic uncertainty, and delays in U.S. crypto legislation. Bitwise's institutional clients are roughly divided into two categories: investors who have already allocated Bitcoin over the past two years view this decline as an opportunity for rebalancing and dollar-cost averaging, while another part of the large capital is still waiting for a clearer regulatory framework. He said, "In 2022, clients asked whether crypto could survive; in 2026, they ask about entry points and position sizes. It's a completely different conversation."

Leon believes that the current decline is the "most structurally mild bear market" on record for Bitcoin, currently down about 50% from its peak, compared to 78% in the 2022 bear market and 84% in 2018. He noted that Bitcoin's cycle bottoms are rising each time, reflecting the asset's gradual maturation, with marginal holders shifting from retail speculators to professional allocators.

However, Leon also acknowledged that Bitcoin could still move lower, as past bear markets typically lasted about 12 to 13 months, while this one is currently about 8 months. He pointed out that some traditional bottoming signals have already emerged, including oversold momentum indicators, roughly half of Bitcoin holders being in loss, long-term holders reaccumulating, and record outflows from spot Bitcoin ETFs in June. Current crypto market problems are more macro-driven than fundamental.

Leon also said the AI boom has attracted tens of billions of dollars that might otherwise have flowed into the crypto market. Since April, memory chip ETFs have attracted about $12 billion in inflows, while spot Bitcoin ETFs have seen over $4 billion in outflows. As AI capital expenditure expectations are priced into the market and relative valuations shrink, allocators may look again at assets that are down 50% from their highs and have improving fundamentals. He also believes AI and crypto will gradually become complementary, with agentic AI potentially relying on programmable money, machine-to-machine payments, and stablecoin rails.