Crypto at a Crossroads: Winter Fatigue Meets the Risk of Lower Lows

Market veterans say crypto is deep in a psychological winter, with stronger fundamentals clashing against the growing risk that prices still need one more washout.

A growing number of market watchers agree on one point: crypto is deep in a winter. Where views diverge is how close the market is to a durable bottom, and how much more pain may come first.

In a note sent to clients on Monday, Bitwise CIO Matt Hougan argued that the industry has effectively been in a bear market since January 2025, even if ETF flows masked the damage for much of last year. Bitcoin is down roughly 39% from its October 2025 high, Ethereum more than 50%, and large-cap altcoins without institutional support have fallen 60%–75%.

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Hougan’s conclusion was psychological as much as analytical: “Crypto winters don’t end in excitement; they end in exhaustion.” By historical standards, he believes the market is closer to the end than the beginning.

That long-term framing contrasts with a more tactical warning from Galaxy Digital’s head of research Alex Thorn. In a Feb. 1 note, Thorn wrote that bitcoin’s structure points to further downside, citing weak price action, macro uncertainty, and one of the largest liquidation cascades in history. 

Bitcoin fell 15% in four days, briefly trading near $75,600, below both ETF average cost basis ($84k) and Strategy’s average purchase price ($76k). Nearly 46% of BTC supply is now underwater, a level historically seen near major bottoms, but not always the final one.

Thorn highlighted that outside of 2017, every 40% drawdown from an all-time high eventually became a 50%+ decline, which would imply prices closer to the $60k range, near realized price ($56k) and the 200-week moving average ($58k).

Still, there are signs of stabilization beneath the surface. Long-term holder selling, which averaged $500 million per day in 2025, has notably slowed. On Monday’s Bits + Bips livestream, Cosmo Jiang from Pantera Capital said “fundamentals are a lot better and trending in the right direction,” while Austin Campbell added, “I don’t think there’s been a better time for the industry and the forward path of adoption.”

The picture that emerges is nuanced: structurally healthier crypto markets, improving fundamentals, but a price still searching for capitulation-level conviction. Whether exhaustion has arrived — or still lies ahead — remains the open question.