Bitwise: Bitcoin bear market nearing the end, multiple bottom signals emerging

On July 10, asset management firm Bitwise said in an analysis that the current Bitcoin bear market cycle differs fundamentally from previous cycles. In other words, even though the AI boom has siphoned off large amounts of capital and U.S. crypto legislation has been delayed repeatedly, institutional adoption is steadily moving forward.

As its investment strategist Juan Leon pointed out, Bitwise’s client base is showing a polarized trend. Investors who have held Bitcoin for more than two years view the current drop as an opportunity to add to their positions, while other large capital is waiting to enter until regulatory clarity is provided.

He believes that unlike in 2022, when the company’s clients were generally worried about “whether crypto can survive,” the question in 2026 has shifted to “when to enter and how much to allocate.” This change in the nature of the discussion itself reflects the market’s growing maturity.

Leon emphasized that the 50% decline in this round can be considered Bitcoin’s “mildest structural bear market,” sharply contrasting with the historical drawdowns of 78% in 2022 and 84% in 2018, highlighting the long-term trend that “the bottom is lifted in every cycle.”

At present, multiple bottom signals in the crypto market have started to appear. These include technical indicators showing oversold conditions, roughly half of holders currently sitting on unrealized losses, long-term holders beginning to reaccumulate again, and record outflows from ETFs in June.

The analysis noted that the pressure on the current crypto market comes more from the macro level rather than fundamentals. Persistent inflation has delayed expectations for rate cuts, geopolitical conflicts have intensified uncertainty, and the AI boom has siphoned off hundreds of billions of dollars in potential crypto capital.

But Leon believes the future relationship between AI and crypto will be complementary, because as agentic AI develops, its demand for programmable money and machine-to-machine payments will make stablecoin infrastructure a key link connecting the two major fields.

Regarding the CLARITY Act, he expects that even if the legislation cannot pass before the August recess, its eventual rollout could still bring a shift in the participation structure of “tens of trillions of dollars in new institutional capital.”

Overall, this series of observations collectively suggests that the current crypto market is closer to the clearing-out tail end of the cycle rather than the beginning of a structural long-term downturn.

#Bitwise # Market Viewpoint