As the cryptocurrency market continues to slog through persistent volatility and weakened prices, one influential voice in the sector is offering a contrarian but cautiously optimistic view: the infamous “crypto winter” that has dogged digital assets for more than a year may be closer to its end than its beginning. That assessment comes from Matt Hougan, Chief Investment Officer at Bitwise Asset Management, who argues that the severity of the downturn has largely been masked by strong institutional flows — particularly through exchange-traded funds (ETFs) and treasury investment strategies — rather than a true reflection of underlying market health.
In a widely circulated memo to Bitwise clients and echoed in recent market commentary, Hougan described the crypto market’s recent phase as a full-blown winter rather than a mere correction. According to him, what began subtly in early 2025 matured into a broad downturn characterized by sustained price declines, negative sentiment and diminished retail participation — conditions that mirror the painful market winters of 2018 and 2022.
Bitwise’s analysis begins with a blunt acknowledgement that digital assets have been underperforming for an extended period. Bitcoin, the market’s flagship asset, is down roughly 39 percent from its all-time high reached in October 2025, and Ethereum has experienced an even steeper decline of approximately 53 percent from its peak. Many other tokens with less institutional backing have fared far worse, with some falling 60 percent or more.
To contextualize this downturn, Hougan pointed out that the underlying weakness in market pricing actually predated Bitcoin’s official peak. He argued that the downtrend began around January 2025 — long before the 2025 rally captured headline attention — meaning that much of the market had been quietly weakening even as prices climbed temporarily. Institutional flows into ETFs and digital asset treasury vehicles helped cushion those price moves, creating a false sense of stability that obscured the severity of losses across the broader crypto ecosystem.
This analysis is backed up by performance data from Bitwise’s own indices, which show a clear divergence between assets with strong institutional demand and those without. Tokens backed by ETFs or significant treasury allocations — including Bitcoin, Ethereum and XRP — have seen milder declines relative to their peers. In contrast, assets with little or no institutional access have suffered steeper drawdowns, highlighting how institutional buying power has acted as a buffer rather than a sign of fundamental market health.
Institutional Flows: Cushion or Cover?
One of the central tenets of Hougan’s view is that institutional capital has played a dual role during this winter. On one hand, inflows from regulated ETFs and treasury investment strategies did indeed support prices by absorbing significant amounts of Bitcoin and other major assets. Bitwise estimates that these institutional channels purchased more than 744,000 BTC during the past year, equivalent to roughly $75 billion in demand, which helped limit Bitcoin’s decline relative to what it might otherwise have been. In the absence of this demand, Hougan suggests, Bitcoin’s drawdown could easily have approached 60 percent or more from its peak.
On the other hand, those same flows have served to mask the full extent of market weakness. Because institutional demand concentrated on a narrow set of large-cap tokens, aggregated price data for those assets looked relatively less damaged, especially when compared with the catastrophic losses seen in lesser-known tokens. That created a misleading narrative for observers who equated price resilience with overall market health. In reality, broader segments of the crypto market were enduring deep losses that escaped headline attention because institutional vehicles were quietly supporting a handful of major assets.
This dynamic has profound implications for how investors perceive the current state of the market. Retail traders often look at headline price movements and assume that the worst of a downturn is over when major assets stabilize. But Hougan’s argument suggests that underlying market stress persisted long after the headlines turned optimistic, and that the appearance of resilience was an artifact of how institutional capital was deployed.
What Comes Next: Exhaustion Before Recovery
Despite the sobering diagnosis of the market’s health, Hougan believes there are reasons to be cautiously optimistic about the timeline for the crypto winter’s end. He draws on historical patterns from previous prolonged downturns — such as those in 2018 and 2022 — which were marked not by a sudden rebound but by a period of exhaustion and malaise followed by gradual stabilization.
In those cycles, markets did not turn on positive news alone. Instead, bearish sentiment had to erode to the point where even bad news failed to produce significant selling pressure. Hougan notes that the current market environment exhibits some of those signs: sentiment gauges remain deeply negative, liquidity has thinned, and price action lacks the velocity of prior bull markets. While that paints a bleak picture on its face, it also suggests that marginal sellers may already have exited positions, removing some of the downward pressure that kept prices pinned.
Beyond these structural market characteristics, Hougan points to a number of potential catalysts that could underpin a broader stabilization or eventual recovery. Among them are continued advances in regulation — including work on market structure legislation — increasing adoption of stablecoins and tokenization, signs of sovereign or institutional interest in Bitcoin as a reserve asset, and macroeconomic conditions that could support risk asset allocation. Each of these factors, he argues, represents long-term progress that is often overlooked during down markets, precisely because bearish sentiment drowns out good news.
One striking observation made by Hougan is that retail sentiment frequently fails to respond positively even to objectively constructive developments during bear markets. He highlighted an example in which a newly appointed Federal Reserve chair with a stated affinity for Bitcoin did little to lift sentiment. This reflects a broader psychological reality in financial markets: bearish psychology often overwhelms positive signals until exhaustion reaches a tipping point.
It’s important to note that Hougan’s view is not a straightforward bullish call. He is not predicting an imminent price explosion or a dramatic rally. Rather, his thesis is nuanced: the market may be closer to the end of its downtrend cycle than its beginning, but the path out of a crypto winter is neither swift nor smooth.
According to historical patterns, major uptrends tend to begin after cumulative market exhaustion — a phase in which prices have broadly stabilized, sentiment stops trending lower, and buyers begin to re-enter on a sustained basis. This could mean extended periods of sideways trading or modest upward drift before any breakout occurs.
What Hougan’s analysis does suggest is that we may be entering that late stage of a prolonged downturn, in which the market’s structure and fundamentals are ready to support eventual recovery once sentiment has truly bottomed. This reflects a shift away from viewing recent weakness as merely temporary noise, toward recognizing that the market has been undergoing a deep cyclical adjustment — one that may be nearing its final act.
The Bitwise CIO’s perspective on the current crypto winter offers a compelling lens through which to view recent market dynamics. By emphasizing that institutional flows have masked deeper losses — and that the downturn’s true breadth only became clear when sentiment collapsed — Matt Hougan challenges simplistic interpretations of price charts and narrative headlines. His view that the market is closer to the end of this prolonged bear phase than the beginning is rooted in historical patterns, structural market behavior and institutional demand dynamics.
For investors and traders, this nuanced analysis suggests that while volatility and uncertainty may persist, we could be approaching a point where selling pressure diminishes enough to allow stabilization and eventual uptrend formation. In a market defined by cycles of boom and bust, recognizing when a winter is truly ending — rather than just pausing — can make all the difference in framing long-term strategy and sentiment.