Bitwise indicates that maximum anxiety levels suggest the cryptocurrency market is approaching a low point.

The crypto asset management firm expressed that although the present drawdown reflects the concerns seen in 2018 and 2022, long-term positive drivers remain in place.

Bitwise indicates that heightened anxiety suggests the crypto market is approaching a bottom. (CoinDesk)

Key points:

• Bitwise observed that the current market mood resembles that experienced during the 84% and 77% declines of earlier cycles, which ultimately turned out to be “remarkable buying opportunities.”
• Despite the drop in prices, the report pointed out that Wall Street’s integration, tokenization, and “AiFi” are expanding the gap between market valuation and realized advancement.
• Though exhaustion typically signifies a bottom, the firm highlighted the CLARITY Act, anticipated rate cuts, and advancements in AI as possible positive shocks.

Bitwise argues that the crypto sector’s fixation on timing a market bottom neglects a historical trend where peak investor anxiety often marks the beginning of a recovery.

Having weathered the market downturns of 2018 and 2022, the crypto asset manager indicated that the prevailing “anxious sentiment” is a lagging indicator of historical recovery zones.

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Bitwise CIO Matt Hougan remarked that those who purchased during the 2018 low experienced returns of about 2,000%, while investors who entered at the 2022 lows have seen increases of around 300% in just over three years. For long-term investors, the firm perceives the current disconnection between price and progress as a repetition of these particular cycles.

The worldwide crypto market has had a challenging start to 2026, with more than $2 trillion in value erased since the peak in October 2025. Bitcoin BTC$65,998.81 recently fell to a 16-month low just below $60,000, a psychological level that triggered approximately $5.4 billion in leveraged liquidations within a short 72-hour period.

Analysts have attributed the turmoil to a combination of macroeconomic challenges: the appointment of Kevin Warsh as Federal Reserve Chair indicating a hawkish monetary policy, significant outflows from U.S. spot exchange-traded funds (ETFs) amounting to billions, and a broader trend of risk aversion causing investors to retreat from both digital assets and high-growth technology stocks.

The largest cryptocurrency was trading around $68,800 at the time of publication.

According to the blog post released on Friday, the fundamental case for the asset class remains unaltered despite the fluctuations in price.

Hougan asserted that the world is becoming increasingly digital and requires non-fiat currencies, citing the rise of stablecoins, the growth of tokenization, and the development of prediction markets and “AiFi” as indicators of a more mature ecosystem.

He stressed that while current prices do not accurately reflect this progress, Wall Street’s ongoing integration with blockchain technology implies that fundamentals will eventually propel the next upward movement.

In terms of a potential recovery, Bitwise recognized that crypto bear markets generally conclude in exhaustion rather than a sudden surge of enthusiasm. However, the asset manager identified several specific factors that could act as catalysts for a rebound.

These include the possible enactment of the CLARITY Act, a return to risk-on market sentiment, rising expectations for interest rate cuts, and technological innovations at the convergence of AI and crypto. In the absence of an immediate positive shock, Bitwise anticipates the market to “grind out a bottom,” recommending a strategy of patience and a focus on long-term objectives.

Read more: Deutsche Bank says bitcoin’s selloff signals a loss of conviction, not a broken market