Crypto Winter 'Only 49% Deep' Compared to 2018 Downturn

Bitwise Chief Investment Officer Matt Hougan believes that the current crypto downturn is fundamentally healthier than previous bear markets. Speaking on Tuesday, Hougan noted that Bitcoin's 49% decline from its peak near $4.4 trillion in total market capitalization is less severe than the 88% drop seen in 2018 or the 73% decline in 2022.

Hougan pointed to several key differences between the current market and previous cycles, including a stronger infrastructure, a favorable regulatory environment, and the emergence of trillion-dollar stablecoin and tokenization markets. He also highlighted the presence of ETFs, rising concerns about fiat currency, and significant investments from companies like BlackRock and Apollo in decentralized finance.

However, not everyone shares Hougan's optimism. Glassnode reported that Bitcoin's drop to $60,000 on February 6 imposed 'drastic psychological pressure' on long-term holders, with the seven-day exponential moving average of Long-Term Holder SOPR falling below 1 for the first time in over a year.

Joao Wedson, founder of Alphractal, offered a more measured view, noting that while long-term holders are still in profit, the market has not yet reached the point where even the most convicted participants are holding unrealized losses. This historically marks the phase of maximum market depression and is often seen as a sign that a new bull run is imminent.