SKN | Bitwise Says Peak Anxiety Signals Crypto Market Is Nearing a Bottom as Long-Term Catalysts Hold

As crypto markets grapple with one of their sharpest drawdowns in years, asset manager Bitwise argues that the prevailing sense of fear may be less a warning sign than a familiar milestone. In a Friday blog post, the firm said current investor anxiety closely resembles sentiment seen at prior cycle lows, suggesting the market may be approaching a bottom even as prices remain under pressure.

The global crypto market has endured a bruising start to 2026, with more than $2 trillion in value erased since the October 2025 peak. Bitcoin recently slid to a 16-month low near $60,000 before rebounding modestly, a move that triggered roughly $5.4 billion in leveraged liquidations over a 72-hour period. At publication time, the world’s largest cryptocurrency was trading around $68,800, still well below recent highs and emblematic of the market’s fragile mood.

Echoes of Past Crypto Winters

Bitwise framed the current drawdown within a historical context, noting that today’s sentiment mirrors the despair seen during the 2018 and 2022 bear markets, when crypto prices fell by roughly 84% and 77%, respectively. Those periods, the firm argued, ultimately proved to be “incredible buying opportunities” for investors with the patience to look beyond near-term volatility.

Matt Hougan, chief investment officer at Bitwise, pointed out that investors who bought during the depths of the 2018 downturn saw returns of around 2,000% in subsequent years, while those who accumulated assets near the 2022 lows are up roughly 300% just over three years later. In his view, the current “anxious feeling” in the market is a trailing indicator that has historically appeared close to recovery zones, rather than at the start of prolonged declines.

Macro Headwinds and Forced Selling

The latest leg down has been driven by a convergence of macro and market-specific pressures. Analysts cite a hawkish shift in monetary expectations following the nomination of Kevin Warsh as U.S. Federal Reserve chair, persistent outflows from U.S. spot bitcoin exchange-traded funds totaling billions of dollars, and a broader de-risking trend that has pushed investors out of both digital assets and high-growth technology stocks.

These forces have intensified volatility and contributed to forced liquidations across derivatives markets, accelerating price declines. Yet Bitwise stressed that such capitulation dynamics are typical of late-stage bear markets, when exhaustion, rather than renewed optimism, often marks the end of selling.

Fundamentals Versus Price Action

Despite the sell-off, Bitwise argued that the fundamental case for crypto remains intact. The firm highlighted ongoing progress that is not reflected in current prices, including deeper Wall Street integration, the expansion of tokenization, and the emergence of new sectors such as prediction markets and so-called “AiFi,” which blends artificial intelligence with decentralized finance.

Hougan said the world’s increasing digitization continues to support demand for non-fiat financial infrastructure, pointing to the rapid adoption of stablecoins and blockchain-based settlement systems. While market values have retraced sharply, he described a widening gap between price action and realized progress across the ecosystem.

Potential Catalysts Ahead

Looking forward, Bitwise identified several potential triggers that could shift sentiment and support a recovery. These include the possible passage of the Digital Asset Market CLARITY Act in the United States, a return to risk-on conditions in global markets, rising expectations for interest rate cuts, and technological breakthroughs at the intersection of AI and crypto.

Absent a sudden positive shock, the firm expects the market to “grind out a bottom” over time rather than stage a dramatic rebound. For long-term investors, Bitwise’s prescription is patience — focusing less on precisely timing a bottom and more on the long-term trajectory of an industry it believes continues to mature beneath the surface volatility.

Key Points

Bitwise says current crypto market anxiety resembles sentiment at prior cycle lows in 2018 and 2022.

Despite a $2 trillion market drawdown, the firm argues that fundamentals such as tokenization and Wall Street integration remain strong.
Potential catalysts include regulatory progress, rate-cut expectations, and AI-driven innovation, even if the bottom forms gradually.