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This Crypto Winter Feels Healthier Than Before, Says Bitwise CIO

Some people say the crypto market is in a winter that is worse than 2018 or 2022. But Bitwise’s top investor, Matt Hougan, thinks those years were tougher in their own way. On Tuesday, he shared his view that this year’s downturn is not as bad as those past crashes.

To understand his point, it helps to look back. In 2018, Bitcoin price was around $3,000. At that time, Ethereum, which many call a global computer, had few apps and slow performance. In 2022, the whole crypto market collapsed, and some regulators talked about shutting crypto businesses down.

Today, Hougan says things are different. He notes several big changes. For one, stablecoins have grown a lot and now reach into the trillions in value. Stablecoins are a kind of crypto that tries to stay close to a stable price, like the US dollar. For another, the idea of turning real-world assets into crypto—often called tokenization—is growing very big. Some estimates put tokenization at around $200 trillion in potential value. There is also a more friendly regulatory mood and better token economics, or tokenomics, which are the rules that determine how tokens work and how they gain value.

Hougan also points to big players like BlackRock and Apollo building in the DeFi space. DeFi stands for decentralized finance, a way to use computer code to run financial services without the usual middlemen like banks. He says the crypto market today has a large and well-built infrastructure. There are exchange-traded funds (ETFs) for crypto products, and there are growing concerns about traditional money, or fiat currency, being unstable in some situations. All of this, he argues, makes him optimistic about the road ahead—though not without bumps along the way.

“So, yes, I’m optimistic,” he said. “It doesn’t mean smooth sailing, but I’m excited for the ride.”

Bear Markets in the Past Were Often Apocalyptic

The current downturn in crypto is a bear market, a time when prices fall and people feel pessimistic. In this period, the total market value of all crypto moved down by about 49% from a peak near $4.4 trillion in October to a low around $2.23 trillion on February 6. This drop is smaller than many past bear markets, but it is not over yet. In 2018, the market fell about 88% from its high, and in 2022 it fell roughly 73% from the cycle peak.

People describe the 2022 FTX crash as very dark, and the 2018 period as a moment when some people felt crypto could almost disappear. The Kobeissi Letter, a market newsletter, called the 2022 crash particularly grim. The COVID-19 crash in March 2020 was also brutal, with markets dropping about 56% in less than a month.

The difference this time, according to Hougan, is that crypto’s fundamentals—the underlying strength of the technology and its use cases—are stronger. Many analysts say this slump is driven more by big-world economic and political events than by crypto’s own problems.

Glassnode, a research group, reported that Bitcoin fell to $60,000 on February 6. That drop put a lot of psychological pressure on investors who held through big drops—often called diamond hands. In simple terms, these are investors who hold their coins for a long time, even when prices fall. The pressure from a big drop can shake even the most patient investors.

A post on social media summarized this moment by saying the $60,000 drop was a tough test for those who ride out the volatility. It showed how strong people’s beliefs about Bitcoin and other crypto assets can be when prices swing a lot.

Long-Term Holders Are Still Making Some Profit

Even during a downturn, some investors are still in a good position. Joao Wedson, founder of Alphractal, explained a key idea called Net Unrealized Profit/Loss (NUPL). NUPL looks at how profitable long-term holders are. Wedson said that the current NUPL figure for long-term holders is 0.36. In simple terms, this means that, on average, long-term investors are still in profit right now.

When NUPL becomes negative, it means even the most confident investors are sitting on paper losses. In the past, a negative NUPL has often shown that the market was entering a deep low point. Wedson said that historically, moving into negative territory has marked the moment just before a new bull market begins. However, he also emphasized that we are not there yet. The market still has a way to go before a new upward trend starts.

As this story develops, Bitcoin itself has been trading around the mid-to-high $60,000s. At the time of writing, it stayed near the $68,000 mark after trying but not quite breaking $70,000 in a recent attempt.

The broader question for investors is how much longer this slower, steadier pain will last before the market finds a new direction. Some think the current weakness is part of a longer process of building stronger crypto institutions, better technology, and clearer regulation. Others worry that global events could keep pressuring prices downward for a while longer.

What This Means for People New to Crypto

If you are new to crypto, a market like this can be confusing. Here are a few simple ideas that come up in these discussions:

In short, the crypto market has gone through big changes. Some of these changes could help crypto become more useful and safer in the long run. Others carry risk, and the road ahead is still uncertain. The people who study this space say the current downturn is different from earlier ones because the technology and the ecosystem have matured. The big question is whether those improvements will translate into lasting gains for investors and users in the years to come.

For now, experts advise staying informed, understanding how these technologies work in simple terms, and remembering that markets can be volatile. If you are thinking about investing, it’s important to consider your own finances, be careful with risk, and seek advice if needed.

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