First Coin

Crypto winter could be ending, says Bitwise CIO Matt Hougan

Bitwise Asset Management’s chief investment officer, Matt Hougan, has a busy conclusion about the market. He says the cryptocurrency market has been in a strong slow season, a period people call a crypto winter, since January 2025. But he also notes that signs point to this downturn possibly ending sooner rather than later. In simple words, he sees some changes that could begin to help prices recover, even though the market is still tough right now.

What does crypto winter mean for a beginner? Think about a season in nature. A winter is a time when things slow down. For the crypto market, a winter means prices are low for a long time and people feel wary about buying. It is a form of a bear market, which is when prices go down and stay down for a stretch of time. In the past, crypto winters have happened before, including difficult periods in 2018 and 2022. Hougan says today’s winter is deep, not a quick dip. To understand why, it helps to look at prices and what caused them to fall.

Hougan points to big price drops in the two largest cryptocurrencies. Bitcoin, which is the first and most famous cryptocurrency, has fallen almost 39 percent from its October 2025 peak. Ethereum, the second most valuable asset, is down about 53 percent. Other digital assets have lost even more. When prices fall a lot and stay low, it becomes hard for investors to feel confident about future gains. Hougan stresses that this is not a short-term correction or a small drop. It is a deep and drawn-out bear market that resembles the major crypto winters of the past.

Why is the market in this tough shape? Hougan mentions a few factors. One is excessive leverage. Leverage means people borrow money to buy more crypto, which can amplify both gains and losses. When prices fall, those loans can force bigger losses and more selling. Another factor is profit-taking by long-term holders. These are investors who kept crypto for a long time and decide to sell some of their holdings to lock in profits. When many of them sell at once, prices can fall further.

On the other hand, there are positives in the world of crypto. Hougan notes several developments that feel encouraging. There is ongoing adoption of crypto technologies, clearer regulation in some places, and more involvement from traditional financial institutions. There are also more people and companies hiring in the crypto space. In addition, some big players outside crypto are beginning to use crypto products or want to use them in the future. And there is a sense that the market might be warming up as institutions keep exploring crypto assets and how they fit into their portfolios.

Despite all these positive developments, Hougan says good news does not always move crypto prices during the depths of winter. In a market like this, sentiment—a feeling about whether things will improve—often matters more than headlines about progress. He suggests that the downturn tends to end not through fanfare, but through a slow shift in mood and a gradual return of confidence. In short, the market often needs time to tire out from selling pressure and to start feeling comfortable again about the future.

Another important point Hougan makes is about how money coming into crypto from big institutions can hide how bad things really are. He highlights data from the Bitwise 10 Large Cap Crypto Index. This index tracks several large crypto assets, including Bitcoin, Ethereum, and XRP. According to this data, these big assets declined only about 10% to 20% during the period, a smaller drop. The reason for this not being as bad is that ETFs and Digital Asset Treasuries (which are types of investment products used by institutions) helped cushion the fall. ETFs are funds you can buy on a stock market that hold assets like crypto. Digital Asset Treasuries are similar to bonds that institutions might use to hold crypto assets for safekeeping. These tools give big buyers a way to participate and to provide some price support. They can make the overall market look steadier than it really is for regular investors who buy and sell directly in the crypto markets.

Other assets did not get the same cushion. Solana, Litecoin, and Chainlink faced declines in the range of 37% to 46%. Cardano, Avalanche, Sui, and Polkadot were hit harder, with losses between 62% and 75%. These numbers show a split in the market. Some assets had better protection because of institutional access through ETFs and DATs. But many tokens that are more focused on individual or retail investors — people who buy crypto for themselves rather than for big institutions — felt the pain of the downturn more intensely.

Hougan gives a concrete example from the period: institutions bought more than 744,000 Bitcoin through ETFs and DATs, a total that was around $75 billion in support. This buying helped hold up Bitcoin and some other big assets. If that buying had not happened, Hougan believes Bitcoin could have fallen by roughly 60% since January 2025. This is an important idea. It shows that the market is not just about price moves on a single day. It is also about who is buying, who is selling, and what kinds of products exist to help people invest in crypto.

So when could this crypto winter end? Hougan says there are several possible signs. He thinks a true recovery might come sooner rather than later. He even notes that the winter has lasted a long time — since January 2025 — and he believes spring could arrive soon. The sense of renewal is not guaranteed, but the combination of growing institutional interest and more practical crypto use by traditional financial firms could help push crypto assets back toward better prices over time.

Bitcoin’s position among the world’s assets

The strength of the downturn is also seen in Bitcoin’s ranking compared with other assets around the world. Bitcoin has dropped out of the top ten assets by market capitalization. Market capitalization is the total value of all coins that have been mined, if you multiplied the price by the total number of coins. As of February 2, Bitcoin was ranked 13th in the world by market cap, according to data from CompaniesMarketCap. This is a big change for an asset once at the very top of the list.

The market value of Bitcoin, often called its market cap, has fallen to about $1.56 trillion. This is a drop from roughly $2.35 trillion in July 2025, when Bitcoin had been ranked around 6th after a strong run that pushed its price above $119,000. These shifts show how broad the downturn has been, not just for a single price but for its place in the global financial picture.

All of these findings come from reports and data sources that track how crypto assets are moving. They remind readers that the crypto market is connected to investor behavior, market access, and the kinds of products that are available to big and small buyers alike. The overall picture is important not just for people who own digital assets, but also for people who study finance and want to understand how new technologies can change the way money moves around the world.

In short, Matt Hougan and Bitwise are saying this: the market has been very weak for a long time, with weak prices and deep losses. Yet there are positive signals, especially from institutions and some market infrastructure. If those signals grow stronger and if sentiment becomes more optimistic, a recovery could come sooner than many people expect. For now, investors should understand that the downturn is still ongoing, and that the path to recovery may involve a mix of slower price gains, cautious optimism, and continued growth in institutional interest.

Glossary (explained in simple words)

The discussion here is about how big trends in finance and technology affect prices in crypto markets. It is important to learn and ask questions, especially if you are new to investing. If you want to understand more, you can look up the terms above to read simple definitions from reliable sources. Financial markets go up and down for many reasons, and learning the basics can help you make better decisions on your own journey into digital assets.