Recent turbulence across digital asset markets has reignited debate over whether crypto remains in a bear phase or is already transitioning into a new cycle.
Key Takeaways
The broader crypto market may have already passed its bear phase, Bitwise CIO says.
Institutional demand is reshaping the next cycle, making it more selective.
Matt Hougan, chief investment officer at Bitwise Asset Management, recently argued that beneath the surface, much of the market may have already gone through its downturn.
The case he outlined is that the latest bear phase did not play out evenly. While major assets such as Bitcoin and Ethereum showed relative resilience, large parts of the broader market suffered deep losses.
Tokens lacking sustained institutional demand experienced drawdowns similar to those seen in previous bear cycles, even as flagship assets avoided a full collapse.
Hougan’s view highlights how institutional participation has altered market dynamics. The arrival of spot Bitcoin ETFs and growing corporate exposure created a steady source of demand that absorbed selling pressure that would have driven prices significantly lower in earlier cycles.
As a result, weakness was concentrated in lower-quality projects rather than spread uniformly across the market.
Looking ahead, Hougan suggested the next phase is unlikely to resemble past broad-based rallies. Instead, capital is becoming more selective, favoring networks with real-world usage, strong activity and durable fundamentals, while speculative or inactive projects struggle to attract attention.
He also pointed to a gradual transition taking place within the market, as early investors reduce exposure and institutional players increasingly step in as buyers. While this process can weigh on prices in the short term, Hougan views it as a sign of a maturing asset class rather than fading demand.
Taken together, Hougan’s comments suggest the crypto market may already be rebuilding from a fragmented downturn rather than entering a fresh bear phase. If that assessment proves correct, the next advance is likely to be led by a smaller group of high-quality assets rather than a broad market surge.