Bitwise: Bitcoin's bear market bottoms are rising each cycle, institutional funds are buying the dip.

Bitwise Senior Investment Strategist Points Out This Bitcoin Bear Market Is the "Structurally Mildest" on Record, with a Decline of Only 50% from the Peak; Institutional Funds Are Viewing the Pullback as a Rebalancing and DCA Opportunity.

(Previous: Mr. Berger: From a Profit/Loss Perspective, We Are Not Far from the Bear Market Bottom) (Background: Dragonfly: Current Market Is the "Most Laid-Back Bear Market in History," Bitcoin Rebounds to $96k)

Table of Contents

Toggle

• Institutional Clients' "Two-Tier Conversations"
• Where Is the Capital Absorbed by the AI Boom?
• Traditional Bottom Signals Have Emerged
• Q2 Buying Volume by Listed Companies Surges

Bitwise Senior Investment Strategist Juan Leon noted in his latest analysis that the current Bitcoin downturn is the "structurally mildest bear market" on record for the asset, with each cycle's bottom rising, reflecting Bitcoin's gradual transition from a speculative retail asset to a professional asset allocation.

In an exclusive interview, Leon stated that Bitcoin has fallen approximately 50% from its all-time high, far below the 78% decline in the 2022 bear market and the 84% retracement in 2018.

Institutional Clients' "Two-Tier Conversations"

Leon observed that Bitwise's institutional clients broadly fall into two categories. Investors who have allocated to Bitcoin over the past two years are viewing the current decline as an opportunity for rebalancing and dollar-cost averaging. The other group, large capital, is still waiting for a clearer US regulatory framework.

Leon described the differing focus of the two client groups: "In 2022, clients asked whether crypto could survive. In 2026, they ask about entry points and position sizing. It's a completely different conversation."

Where Is the Capital Absorbed by the AI Boom?

Leon also pointed out that the AI boom has attracted billions of dollars that might have otherwise flowed into the crypto market. Since April this year, storage chip ETFs have attracted approximately $12 billion in inflows, while spot Bitcoin ETFs have seen outflows exceeding $4 billion.

However, he believes that as AI capital expenditure expectations are priced in and relative valuations contract, allocators may again look for assets that have declined 50% from their highs with improving fundamentals. Leon also anticipates that AI and crypto will gradually become complementary, with agentic AI potentially relying on programmable money, machine-to-machine payments, and stablecoin rails.

Traditional Bottom Signals Have Emerged

Leon noted that some traditional market bottom signals have begun to appear:

• Momentum indicators oversold
• Approximately half of Bitcoin holders are in loss
• Long-term holders are re-accumulating
• Spot Bitcoin ETFs saw record outflows in June

Leon also cautioned that Bitcoin could still decline further, as past bear markets typically lasted about 12 to 13 months, while the current cycle is around 8 months. He emphasized, however, that the current issues in the crypto market are more macro-driven than fundamental.

Q2 Buying Volume by Listed Companies Surges

Echoing Leon's assessment, BTC Treasuries data shows that listed companies purchased approximately 110k BTC in the second quarter of 2026, a buying volume 1.8 times the total of the previous two quarters combined. The total amount of Bitcoin held on corporate balance sheets has now exceeded 1.26 million BTC, accounting for over 6% of Bitcoin's total supply.