CIO Bitwise: Bitcoin has not yet reached the bottom of the cycle - ForkLog: cryptocurrencies, AI, singularity, the future

# CIO Bitwise: Bitcoin Has Not Yet Reached the Cycle Bottom

In 2026, Bitcoin will begin to rise, but the shocking events of early February were not the final bottom for the asset. This was stated by Bitwise Investment Director Matt Hougan on the Blockspace podcast.

The expert was referring to the sharp decline of the first cryptocurrency on February 6 to $60,000. The price hit a low not seen since September 2024.

At the time of writing, the price recovered to above $68,000 (CoinGecko). However, Hougan admits that the correction may not be over:

“One or two major shocks happen more frequently. I wouldn’t be surprised if something similar happens again in the future.”

He disagreed with the opinion that the record liquidation of over $19 billion on October 11 marked the beginning of a bear market. According to Hougan, the crypto winter started in January 2025 after U.S. President Donald Trump’s inauguration. Back then, selling outside of Bitcoin and Ethereum began.

Institutional investors responded slowly to the situation, which led to a loss of $19 billion. This event confirmed the onset of the crypto winter, causing both leading digital assets to plummet.

Historically, Bitcoin’s price movements have occurred within four-year cycles linked to halvings. After the block reward reduction, the asset’s price initially rose, then sometimes declined by 80-90%.

Hougan believes that with the influx of major players into the industry, the depth of such declines will decrease to 50-60%. He linked this to the fact that institutional and retail traders operate in different cycles — when one group is selling, the other may be buying.

“This is the new reality we find ourselves in,” — said Hougan.

Warning Signs for Bitcoin

Retail traders holding less than 0.01 BTC are aggressively buying cryptocurrency on every minor price dip. Conversely, institutional investors (10-10,000 BTC) have sold a “huge volume” of assets over the past five weeks, according to Santiment.

The company’s experts called this divergence “alarming.”

“Historically, sustainable bull markets require accumulation of funds by ‘smart money,’ not retail buying on dips,” — they explained.

Santiment specialists pointed out another negative trend for Bitcoin — on-chain transaction volumes, the number of new addresses, and network growth rates are steadily declining.

“Real market expansion should be supported by increased user activity, which is currently not observed,” — the experts noted.

However, they also highlighted positive signals:

• The number of extremely optimistic price forecasts for Bitcoin on social media has decreased, which is a “healthy market indicator.”
• The 30-day MVRV ratio for the first cryptocurrency is -6, confirming a sufficiently high probability of a recovery rally.

No Rapid Rebound Expected

Bitcoin rarely forms V-shaped lows outside periods of economic stimulus, such as during COVID-19. Usually, after reaching a bottom, the asset remains at that level for a long time. Macro economist Lin Alden stated this on the Coin Stories podcast.

“I think we are currently in a stagnation phase,” — she said.

During this “prolonged phase,” the price could fall another $10,000–20,000, Alden admitted.

In her view, a catalyst for the next major rally of the first cryptocurrency could be a peak in AI company stocks. When investors realize that the segment is no longer growing as rapidly as before, they will start looking for potentially profitable investments. Bitcoin could become one such asset. For a digital gold rally, a large influx of capital is not necessary — a small increase in demand is enough, Alden explained.

Recall that Hougan named the DeFi sector as a potential driver capable of pulling the crypto market out of its prolonged correction.