Bitwise CIO Warns Crypto Winter Persists Since January 2025 But Highlights Signs Of Potential Recovery

Chief Investment Officer of Bitwise Asset Management, Matt Hougan, released a detailed assessment of the current cryptocurrency market, emphasizing that the industry has been experiencing a prolonged downturn, or “crypto winter,” since January 2025. According to him, the market is now in the later stages of this cycle rather than the beginning.

The report describes the current period as a full-scale market contraction, highlighting significant declines in major digital assets. 

Bitcoin has fallen 39% from its all-time high in October 2025, Ethereum has dropped 53%, and many other cryptocurrencies have suffered even larger losses. This downturn is characterized not as a temporary correction or minor decline but as a substantial market contraction reminiscent of previous cryptocurrency winters in 2018 and 2022. Contributing factors include excessive leverage, widespread profit-taking by early investors, and structural challenges within the market.

Matt Hougan notes that despite ongoing positive developments in the industry, such as increased adoption, regulatory progress, and institutional interest, market sentiment remains deeply negative. 

The Crypto Fear and Greed Index, for example, continues to reflect extreme levels of fear even as notable figures and institutions express support for digital assets. Historical patterns suggest that good news tends to have limited impact during the depths of a cryptocurrency winter, with market recoveries occurring only after sentiment reaches a point of exhaustion rather than during periods of optimism.

Analysis of asset performance since January 2025 reveals distinct outcomes for different segments of the market. Large-cap cryptocurrencies such as Bitcoin, Ethereum, and XRP experienced relatively moderate declines of 10% to 20%, benefiting from institutional support through exchange-traded funds (ETFs) and Digital Asset Treasuries (DATs), as well as legal or regulatory developments in the case of XRP.

A second group of assets, including Solana, Litecoin, and Chainlink, faced standard bear-market losses between 37% and 46%, coinciding with ETF approvals over the course of the year. A third group, comprising Cardano, Avalanche, Sui, and Polkadot, experienced the steepest declines of 62% to 75%, as these cryptocurrencies lacked institutional investment vehicles and relied primarily on retail market support. 

Matt Hougan emphasizes that institutional inflows have historically masked the depth of losses for certain assets, providing temporary support and obscuring the underlying severity of the market downturn.

Crypto Market Shows Signs Of Resilience: Regulatory Progress And Institutional Adoption Could Spark Recovery

Despite the persistent negative sentiment, he points to ongoing positive developments in the cryptocurrency space, including regulatory advancements, increased institutional participation, the growth of stablecoins, tokenization, and the gradual integration of blockchain solutions within traditional financial markets. He suggests that while such progress is often overlooked during prolonged downturns, it represents latent potential that can catalyze market recovery once sentiment stabilizes.

Potential catalysts for renewed market momentum include strong economic growth, legislative developments favorable to digital assets, adoption by sovereign entities, or simply the passage of time allowing for market normalization.

Drawing on experience from previous cryptocurrency winters, the expert concludes that the current market contraction does not alter the fundamental value propositions of cryptocurrencies. He expresses a cautiously optimistic outlook, arguing that after an extended period of market decline beginning in January 2025, conditions are approaching a turning point and that a significant market rebound could occur in the near future.

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