Bitwise: Bitcoin's cycle lows are rising each time, institutional investors are buying the dip.

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

Leon believes the current decline is the "structurally mildest bear market" on record for Bitcoin, with a drawdown of approximately 50% from its peak, compared to 78% in the 2022 bear market and 84% in 2018. He noted that Bitcoin's cycle lows are rising, reflecting the asset's gradual maturation, with marginal holders shifting from retail speculators to professional asset allocators.

However, Leon acknowledged that Bitcoin could still fall further, as past bear markets typically lasted about 12 to 13 months, while the current one is approximately eight months. He pointed out that some traditional bottoming signals have begun to appear, including oversold momentum indicators, nearly half of Bitcoin holders being in loss, long-term holders re-accumulating, and record outflows from spot Bitcoin ETFs in June. The current crypto market issues are more macroeconomic than fundamental.

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