Bitwise CIO Reveals Structural Forces Behind Bitcoin's Decline

Bitcoin has continued to decline amid broader market volatility, with Bitwise CIO John Hougan attributing the drop to structural and psychological factors. The bearish trend, which began in early 2025, has persisted for over a year and is seen by analysts as part of a typical crypto winter. The decline is not linked to any single event or firm, unlike past market corrections.

Bitcoin ETF holders and corporate treasuries are taking proactive steps to protect their portfolios against further declines. They are buying six- and 12-month put options at $60,000 or below, a strategy that allows them to sell bitcoin at that price regardless of market conditions. Open interest in these put options has reached $1.5 billion, the highest level for any strike price and expiry.

Institutional demand for Bitcoin is still evident, with spot ETFs recording significant inflows. On Wednesday alone, inflows totaled $506.51 million, following $257.71 million the previous day. This continued institutional interest provides some support for the price, which stabilized around $68,000.

What Are the Underlying Market Forces?

The bear market has had a pronounced impact on Bitcoin miners and related businesses. American Bitcoin Corp., a mining company backed by the Trump family, reported a $59 million loss in the fourth quarter. The firm's Bitcoin reserves also recorded a $227 million unrealized loss as the price dropped from $126,000 to $70,000 according to reports. The company's strategy of retaining all mined Bitcoin has amplified its losses during the downturn.

How Are Stablecoins and Payments Evolving in the Crypto Winter?

Despite the broader decline in crypto prices, stablecoins continue to gain traction. Stripe's Bridge platform, a stablecoin orchestration service, reported that stablecoin transaction volume more than quadrupled in 2025. This growth highlights the increasing utility of stablecoins in cross-border and B2B transactions.

Meta is also re-entering the crypto space with a new stablecoin initiative. Unlike previous attempts, Meta is leveraging third-party firms like Stripe rather than developing its own stablecoin. The shift comes amid favorable regulatory changes and increased adoption by traditional financial institutions.

What Are Analysts Watching for Recovery Signals?

Analysts remain divided on when the Bitcoin market might bottom out. Bitwise CIO John Hougan suggests the bear market could end within 13 months, while on-chain analyst Willy Woo anticipates a longer bearish period extending into 2027. The debate centers on whether the decline is part of a typical cycle or signals deeper structural challenges.

The broader market is also watching geopolitical developments, particularly U.S.-Iran nuclear talks. Any lack of progress could heighten geopolitical risks, pushing capital toward safe-haven assets like gold. Conversely, a constructive outcome could support risk assets and allow Bitcoin to extend its upward trend.

What Technological Developments Could Influence the Future of Crypto?

Ethereum's Vitalik Buterin has proposed a plan to safeguard the network against quantum computing threats. The initiative aims to reinforce Ethereum's cryptographic foundations with quantum-resistant algorithms. This move reflects growing concerns about long-term security in the face of emerging technologies.

IonQ has also made significant progress in quantum key distribution (QKD) networks. The company deployed one of the largest operational QKD networks in Europe, showcasing its leadership in secure communication technologies. These advancements highlight the role of quantum computing in enhancing data security.