Crypto Winter Since Jan 2025: Recovery May Be Near, Says Bitwise CIO

In a recent analysis titled “The Depths of Crypto Winter,” Bitwise CIO Matt Hougan framed the current downturn as a profound bear market, not a minor correction. He pointed to specific metrics: Bitcoin has fallen almost 39% from its October 2025 all-time high, while Ethereum is down 53%. Many other digital assets have fared worse. Hougan explicitly compared this period to previous crypto winters in 2018 and 2022, indicating a cyclical, drawn-out decline rather than a fleeting dip.

The downturn’s drivers, according to Hougan, include excessive leverage unwinding and widespread profit-taking by long-term holders. What makes this phase particularly notable is the market’s failure to respond to positive catalysts. Developments such as the appointment of a new, Bitcoin-supportive Federal Reserve Chair, Kevin Warsh, increased institutional hiring in the crypto sector, and growing adoption by traditional finance firms have done little to lift prices. “Good news doesn’t matter in the depths of winter,” Hougan stated, emphasizing that such severe conditions typically end not with a surge of enthusiasm but through a gradual process of exhaustion and sentiment normalization.

A critical insight from Hougan’s analysis is the divergent performance within the crypto market, largely driven by institutional capital flows. He cited data from the Bitwise 10 Large Cap Crypto Index, which showed that assets with strong institutional backing, like Bitcoin, Ethereum, and XRP, experienced more moderate declines of 10% to 20%. This support came primarily from Exchange-Traded Funds (ETFs) and Digital Asset Treasuries (DATs), which purchased over 744,000 Bitcoin during the period—representing roughly $75 billion in buying pressure.

Without this institutional buffer, Hougan estimated Bitcoin could have fallen by around 60% since January 2025. In stark contrast, retail-focused and mid-cap tokens bore the brunt of the sell-off. Assets like Solana (SOL), Litecoin (LTC), and Chainlink (LINK) saw typical bear-market declines of 37% to 46%. Others, including Cardano (ADA), Avalanche (AVAX), Sui (SUI), and Polkadot (DOT), suffered devastating losses ranging from 62% to 75%. This bifurcation highlights how institutional access channels have created a two-tiered market, insulating some large-cap assets while leaving others fully exposed to retail sentiment.

The depth of the crypto winter is starkly illustrated by Bitcoin’s declining stature among global assets. According to data from CompaniesMarketCap cited in the report, Bitcoin has dropped out of the top ten assets by market capitalization globally, now ranking 13th as of February 2. Its market cap has dwindled to roughly $1.56 trillion, a significant fall from approximately $2.35 trillion and a sixth-place ranking in July 2025, when its price rallied past $119,000.

Despite the gloomy metrics and weakened global standing, Hougan strikes a cautiously optimistic note on the timing of a recovery. “I think we’re going to come roaring back sooner rather than later,” he said. “Heck, it’s been winter since January 2025. Spring is surely coming soon.” His argument hinges on the historical pattern of crypto winters ending when negative sentiment normalizes and selling pressure exhausts itself, not necessarily when bullish news emerges. The substantial institutional foundation laid by ETFs and DATs, which provided a $75 billion floor for Bitcoin, may also serve as a stabilizing base for a broader market recovery once retail confidence begins to return.