Bitcoin’s ability to trade near $65,000 after a 55% retreat from its October peak has strengthened Bitwise’s view that the market is moving through a late-stage bear period, with exchange-traded product inflows and gradual wealth-management adoption forming the main support beneath large-cap crypto assets.
In an Aug. 12 podcast, Bitwise chief investment officer Matt Hougan and research head Ryan Rasmussen argued that several negative developments had failed to produce a fresh leg lower in Bitcoin. They cited selling linked to Strategy founder Michael Saylor, a reported cold-wallet theft exceeding $100 million, and the stalled progress of the Clarity bill in the U.S. Senate as events that could have damaged sentiment but did not trigger a sustained collapse.
Their argument rests less on a prediction of an immediate rebound than on the market’s response to bad news. Bitcoin has endured a substantial drawdown, yet its reaction to further shocks has become less severe than in earlier phases of crypto bear markets. That pattern can indicate that forced selling has eased and that buyers are increasingly willing to absorb supply at lower prices.
A smaller drawdown than earlier Bitcoin cycles
Rasmussen compared the latest Bitcoin decline with prior cycles in which prices often fell 70% to 80% from their highs. The current 55% pullback remains painful for holders who bought near the peak, but it is materially smaller than the declines that defined previous bear markets.
He said Bitcoin’s cycle amplitude has been shrinking over time. The comparison reflects a market that has grown more liquid and has gained access to regulated investment products, even though sharp declines remain a feature of the asset.
The calendar has also complicated the older cycle narrative. Rasmussen said 2025 was negative on a calendar-year basis, breaking from the commonly repeated pattern of three rising years followed by one declining year. A less predictable cycle would make fixed halving-based expectations less useful, while giving greater weight to flows, liquidity conditions and institutional allocation decisions.
Bitwise’s discussion placed exchange-traded products at the center of that changing structure. Hougan and Rasmussen said crypto exchange-traded products moved from net outflows through late June to stronger net inflows beginning July 1. Their account describes a market in which a growing share of demand arrives through regulated fund vehicles rather than directly through exchanges or on-chain platforms.
Bitcoin and Ether have attracted the bulk of that demand, they said, while Solana and Hyperliquid have received smaller allocations. The concentration is consistent with the liquidity requirements of larger asset managers, which need markets deep enough to absorb sizeable orders and portfolios that can be traded efficiently.
Ether fund flows strengthen after five-week run
Ether traded near $1,900 on Aug. 13, following five consecutive weeks of net inflows into U.S. spot Ether ETFs, according to the figures cited in the podcast. The most recent week brought about $245 million of net inflows, described by Bitwise as the strongest weekly total in nearly four months.
The flow data adds a second source of support beyond Bitcoin-focused products. Ether remains smaller than Bitcoin in the regulated fund market, but consistent inflows could give asset allocators more confidence that the market can support exposure to the second-largest crypto asset without relying solely on retail trading activity.
Hougan described the adoption process inside large financial institutions as slow and methodical. A prospective allocation can require roughly eight meetings before a firm makes an initial decision, he said, with meetings often occurring about once a year. On that timetable, the U.S. approval of spot Bitcoin ETFs in January 2024 would have started an education process that may now be reaching decision points for some wealth platforms.
That does not guarantee uniform allocations, but it helps explain why fund flows may unfold in stages rather than in one immediate surge after a product launch. Internal investment committees, risk teams and financial advisers must determine how crypto fits within model portfolios, how it should be sized and how it should be presented to clients.
Wealth platforms could create steady allocation demand
Hougan and Rasmussen identified Morgan Stanley, Wells Fargo, UBS and Merrill as wealth platforms that could eventually contribute more durable demand. They cited about $20 trillion in combined assets under management across the four firms.
A 1% to 2% crypto weighting in model portfolios at institutions of that scale would translate into substantial potential buying over time. The more relevant factor may be the pace of implementation. Model portfolios typically rebalance gradually, and platforms may introduce exposure through limited approved products or adviser-led programs before making it broadly available.
Bitwise framed this as a two-track crypto market. Large pools of capital are likely to concentrate in Bitcoin, Ether and other highly liquid assets, while crypto-native capital continues to seek on-chain applications with revenue and faster growth potential.
The distinction helps explain why smaller tokens may not benefit equally from exchange-traded product demand. A protocol can have meaningful usage or revenue yet remain too small for a large wealth platform to allocate capital without moving the market.
Hougan and Rasmussen used Uniswap, which they said had a market value of about $2.5 billion, as an example of the capacity limits that can face smaller crypto assets. They also pointed to Hyperliquid, which they said was generating annual revenue near $1 billion, as the type of on-chain business monitored closely by crypto-native participants.
Regulation and macro conditions remain near-term tests
The Bitwise executives also focused on U.S. regulation, particularly the Securities and Exchange Commission’s Aug. 14 consideration of a proposal Hougan referred to as “Reg Crypto.” Hougan said the framework could give new projects a route to raise capital without registration at launch, provided they later meet a pathway toward decentralization.
The proposal’s final terms and any subsequent implementation would determine whether it meaningfully changes how token developers operate. A workable framework could reduce legal uncertainty for projects attempting to move from early fundraising to a more decentralized network structure, though it would not automatically resolve every securities-law question facing token issuers.
Rasmussen also cited the U.S. government’s plan to borrow $600 billion in the fourth quarter and argued that markets had become less sensitive to a hawkish Federal Reserve stance. Higher Treasury issuance can affect liquidity across financial markets, particularly if borrowing absorbs cash that might otherwise move into risk assets.
The more constructive case outlined by Bitwise depends on two forces moving together: sustained demand through regulated products and a macro environment that does not sharply tighten financial conditions. Bitcoin’s resilience near $65,000 has given that thesis support, but the next test will come from whether fund inflows persist as regulatory decisions and heavy U.S. borrowing shape market liquidity.
As bitcoin steadies near $65K, deepen your strategy with our outlook in bitcoin trading strategies for success in 2025.
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