Bitwise Chief Investment Officer Matt Hougan stated in a recent research report that the cryptocurrency market has officially entered a “full-blown winter” starting January 2025. This phase is not just a normal correction but a deep bear market comparable to 2018 and 2022. He pointed out that the root cause of this decline lies in the high leverage built up during the previous cycle and the large-scale profit-taking by long-term holders.
The report shows that despite increased institutional participation, some regulatory improvements, and continuous expansion of crypto asset use cases over the past year, prices continue to weaken. Hougan believes that, based on historical experience, true bear markets often “ignore positive news” until leverage is thoroughly cleared and the market completes de-foaming.
From an emotional perspective, multiple indicators remain in extreme zones. Data shows that the market sentiment index for cryptocurrencies is still near high levels, reflecting that investors have not fully digested the risks. Looking back at history, Bitcoin peaked in December 2017 and bottomed out a year later; it reached a new high in October 2021 and completed the cycle bottom in November 2022. Past winters have lasted an average of about 13 months, providing a reference framework for this cycle.
Hougan further pointed out that institutional buying has somewhat masked the true market weakness. Analysis shows that during the observation period, ETFs and digital asset products bought over 744,000 Bitcoin, forming a strong support. Without this capital buffer, Bitcoin’s price could theoretically face deeper retracements.
However, the report also lists potential turning points, including a rekindling of risk appetite due to global economic growth, the advancement of the CLARITY Act, early signs of sovereign adoption of Bitcoin, and the natural repair effects brought by the cycle’s evolution. Hougan summarized that the current sentiment is highly similar to the late stages of past winters, possibly laying the groundwork for the next structural recovery.
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