TL;DR:
- Bitcoin has accumulated a 24% contraction so far this year, while Ethereum registers a 36% decline and Solana drops 40%.
- Spot trading volumes in the digital asset market have fallen to their lowest levels in years.
- The Polymarket platform assigns a 55% probability to the approval of the Clarity Act before the end of the year.
For Matt Hougan, Chief Investment Officer at Bitwise, cryptocurrencies are no longer in vogue due to a market he described as “brutal.” He explained that the non-tangible asset sector is gradually turning into a contrarian type of investment.
The most recent Bitwise memo reveals that stagnant prices and a loss of momentum make it difficult to attract investor enthusiasm. The executive linked the sector’s weakness to capital preference shifting toward artificial intelligence and firms like SpaceX. Report data indicates that, in contrast to the crypto market, the Nasdaq-100 index recorded a 43% year-over-year advance.
The transition toward fundamentals and the regulatory brake
Hougan noted that the migration of liquidity toward AI is forcing the ecosystem to mature. It is a shift that demands patience, a long-term perspective, and a rigorous analysis of the technical aspects of each protocol.
According to Bitwise sources, scrutiny currently benefits projects with provable revenues. An example of this behavior is Hyperliquid, which has captured growing interest in recent weeks.
On the other hand, uncertainty surrounding the Clarity Act in the United States acts as a brake on the entry of institutional capital. Although the market structure bill cleared a hurdle in the Senate, political analysts consulted by Bitwise place the real probability of passage between 5% and 30%.
Bitwise data suggests that large-cap cryptocurrencies are unlikely to experience a sustainable rally before the legal landscape clears up. The report highlights that the market has the capacity to adapt to both the approval or rejection of the regulation, but is unable to thrive under the current ambiguity.
A crypto winter with different dynamics
Unlike previous bearish cycles, the safe haven for investors now is not exclusively Bitcoin. The trend detected by the asset manager shows a rotation toward lower-cap assets that present credible technical fundamentals.
During the last month, Hyperliquid recorded a 73% increase, Zcash advanced 50%, and Stellar increased 44%. These figures contrast with the bearish behavior of the market’s main currencies over the same period.
Based on this behavior, Hougan maintains that the market could be closer to the end of this bearish cycle than to its beginning. However, the executive warned that the coming weeks of trading could maintain a painful trend for traders.
This optimistic outlook is not unanimous within the industry. Analyst Doctor Profit projected that Bitcoin will enter a capitulation phase below $60,000, seeking a floor in the $40,000 to $50,000 range between September and October 2026. Likewise, CryptoQuant CEO Ki Young Ju estimated that the current bear market could extend into the early months of 2027.
