Bitwise Forecasts End of “Exhaustion Phase” as Crypto Winter Deepens

The cryptocurrency market is currently navigating a period of profound structural fatigue, described by Bitwise Asset Management as a “full-blown” winter that has persisted since early 2025.

In a research note released February 3, 2026, Bitwise CIO Matt Hougan characterized the current atmosphere as a “Revenant-style” winter, one defined by retail despair and market exhaustion that, while painful, historically signals the final stages of a bear cycle.

As of today, Bitcoin is trading at $78,321, roughly 39% below its October 2025 all-time high of $126,080. This volatility occurs despite a record 744,000 BTC (approximately $75 billion) in institutional inflows throughout the past year, which Hougan notes has “masked” the true severity of the downturn for major assets.

The Anatomy of the 2025–2026 Exhaustion

The current market structure is defined by a significant divergence between institutional capital and retail participation.While ETFs and corporate treasuries have provided a floor for Bitcoin, the broader altcoin market has experienced a “bloodbath” due to a lack of similar institutional backing.

• Asset Performance: While Bitcoin has maintained a 39% drawdown, Ethereum has retreated 53%, and non-institutional assets like Cardano and Avalanche have suffered declines ranging from 60% to 75%.
• Sentiment Metrics: The Crypto Fear & Greed Index hit a low of 15 (Extreme Fear) on February 3, 2026. This level of persistent negativity, occurring even alongside positive regulatory headlines, is a hallmark of the “exhaustion phase” where sellers are finally depleted.
• Volume Analysis: Market behavior is currently characterized by “apathy,” with volume remaining compressed as retail investors move toward total capitulation.

Structural Targets and 2026 Pivot Levels

Bitwise analysis suggests that the market is entering a “narrowing bottom” phase, where price action is expected to stabilize before a fundamental regime shift in the second half of the year.

Hougan anticipates that as U.S. regulatory clarity improves and sovereign adoption of Bitcoin as a reserve asset increases,the “potential energy” stored during this winter will be released. He projects that Bitcoin could return to its historical 4-year cycle growth, potentially targeting $120,000–$150,000 by late 2026 once sentiment normalizes.

Market Scenarios and Risk Invalidation

The transition from winter to “crypto spring” depends on specific technical confirmations over the next two quarters.

• Bullish Reversal: A sustained reclaim of the $80,000 level, accompanied by a shift in the Fear & Greed Index toward “Neutral” (45+), would confirm that the exhaustion phase has concluded. A break above the $100,000threshold would signal the start of a new expansionary regime.

• Bearish Invalidation: If Bitcoin fails to maintain the $73,000 support during the first half of 2026, it would invalidate the “narrowing bottom” thesis. Such a breakdown would imply a move toward the $58,000–$60,000liquidity pool, significantly delaying the projected recovery timeline.

Strategic Takeaway

The market currently reflects a “fire-sale” valuation for Bitcoin, with on-chain metrics such as the MVRV z-score signaling extreme undervaluation. While the technical structure remains fragile and favors short-term bears, the fundamental backdrop of stablecoin growth and institutional adoption remains intact. Bitwise suggests that for informed readers, this moment represents the “final signal” before a structural reversal, provided the key support levels in the mid-$70,000s hold.

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