According to Hougan, the current situation is reminiscent of the crypto winters of 2018 and 2022, when the general recession continued despite the positive news.
"What is happening now is a classic bear market. Excessive use of borrowed funds combined with the habit of early investors to lock in profits is only reinforcing the negative trend," explained the top manager.
The downward trend began in early January, but many investors did not pay enough attention to it, the Bitwise investment director complained.
"The influx of funds from institutional investors has masked the true weakness of the market. Without support from exchange—traded funds and purchases of U.S. Treasury bonds, bitcoin's decline could have reached 60%," Hougan said.
In his opinion, it is difficult to predict the exact recovery period of the crypto market, but it is likely that it is still slowly moving towards a gradual rebound rather than a deeper decline. The growth catalysts may be economic growth in the United States and the possibility of bitcoin recognition by individual states, Hougan added.
Earlier, analysts at the Pantera Capital hedge fund said that the crypto market has entered a "cooling phase" when the use of borrowed funds is decreasing, and the quotes of large cryptocurrencies have undergone a deep correction.