Asset management firm Bitwise suggests that the current high levels of anxiety across the crypto market may indicate that prices are gradually approaching a cycle bottom. Similar sentiment conditions were observed during the late stages of the 2018 and 2022 bear markets, both of which were followed by significant market rebounds.
Bitwise Chief Investment Officer Matt Hougan noted that investors who entered near the 2018 market bottom achieved approximately 2000% returns, while those buying during the 2022 lows realized roughly 300% gains over the following years.
Divergence Between Fundamentals and Market Prices
Hougan highlighted a noticeable disconnect between price performance and industry fundamentals, a pattern seen in previous market cycles. He emphasized that stablecoin adoption continues to expand, asset tokenization is accelerating, and innovations such as AI + Finance are advancing—demonstrating ongoing maturity across the crypto ecosystem.
From an institutional perspective, market volatility has not halted industry development. Instead, progress continues steadily across both infrastructure and application layers.
Bear Markets Often End With Emotional Exhaustion
According to Bitwise analysis, crypto markets rarely form bottoms during periods of sudden optimism. Instead, they typically undergo gradual consolidation, with investor sentiment slowly becoming exhausted. The current environment may reflect such a phase.
The firm also identified potential catalysts that could support a market recovery, including regulatory progress (such as clearer legislative frameworks), improved macro liquidity, rate-cut expectations, and technological breakthroughs in AI-crypto integration.
Risk Monitoring Amid Elevated Uncertainty
During emotionally charged market conditions, abnormal capital flows and risk events tend to increase. Some institutions utilize tools like Trustformer KYT to monitor large transfers, suspicious address activity, and unusual transaction patterns, enhancing both risk control and compliance management.
Conclusion
Bitwise believes current sentiment may already be approaching historically low levels, potentially signaling emerging long-term opportunities. However, without clear catalysts, markets may continue to experience prolonged consolidation. Investors should closely monitor fundamental developments while maintaining disciplined risk management.