Bitwise: Bitcoin's cycle bottoms are rising, institutional investors are buying the dip

ME News, July 10 (UTC+8), 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 simultaneously affected by the AI boom, macroeconomic uncertainty, and delays in US crypto legislation.

Bitwise's institutional clients are broadly divided into two categories: investors who have allocated to Bitcoin over the past two years view this decline as a rebalancing and dollar-cost averaging opportunity; while another portion of 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 sizing. It's a completely different conversation."

Leon believes the current decline is the "structurally mildest bear market" on record for Bitcoin, with a current drawdown of about 50% from the high, lower than the 78% decline in the 2022 bear market and the 84% decline in 2018.

He stated that the bottom of each Bitcoin cycle is rising, reflecting the gradual maturation of the asset, with marginal holders shifting from retail speculators to professional asset allocators.

However, Leon also acknowledged that Bitcoin could still decline further, as previous bear markets typically lasted about 12 to 13 months, while the current one is about 8 months.

He pointed out that some traditional bottoming signals have begun to appear, including oversold momentum indicators, about half of Bitcoin holders being in a loss position, long-term holders re-accumulating, and record outflows from spot Bitcoin ETFs in June.

The current crypto market issues stem more from the macro level than fundamentals.

Leon also stated that the AI boom has attracted billions of dollars that could have flowed into the crypto market.

Since April, memory chip ETFs have attracted about $12 billion in inflows, while spot Bitcoin ETFs have seen outflows of over $4 billion.

As AI capex expectations are priced in by the market and relative valuations contract, allocators may revisit assets that are down 50% from highs with improving fundamentals.

He also believes that AI and crypto will gradually become complementary, with agentic AI potentially relying on programmable money, machine-to-machine payments, and stablecoin rails.

(Source: BlockBeats)