Bitwise Sees Low in Bitcoin’s Worst Vibes Yet: ‘It’s Darkest Before the Dawn’
Bitcoin closed the second quarter of 2026 in its deepest and longest decline since the last bear market, according to Bitwise Asset Management’s recently released Q3 2026 Crypto Market Review.
But the $9 billion crypto asset manager puts the pain as a setup rather than a crash, arguing that the industry has never been stronger underground.
Bitcoin fell 13.4% in Q2 and is down 32.9% for the year, falling below $60,000 in June for the first time since 2024 and falling nearly 52% below its October peak of $126,080. That extends what Bitwise calls “crypto winter” to nine months and marks the third straight quarter of negative returns for the Bitwise 10 Large Cap Crypto Index, the longest losing streak since 2022.
Chief Investment Officer Matt Hougan disagrees, writing that “vibes in crypto are among the worst I’ve seen in my eight years in the industry.”
Still, bitcoin has held up much better than most of its peers. Its 32.9% year-to-date decline was the shallowest drag among major tokens, easily beating Ethereum’s slide of 46.9%, Solana’s 40.6% and Cardano’s 56.5%.
Bitcoin now commands a 64.2% share of the estimated $1.88 trillion crypto market and has a weight of 77.4% within the Bitwise 10 index, cementing its status as the sector’s safe haven even in a broader selloff.
Bitcoin ETF outflows hit record
The most surprising quarterly figures come from an exchange-traded product company that holds the bitcoin institutional era. US spot bitcoin ETPs bled $4.9 billion in Q2, their worst quarter since launching in January 2024, according to It was drowned.
Assets under management stood at $72.4 billion, with $53.4 billion in net cash flow from the start, but the turnaround underscored how quickly professional sentiment can sour.
The filings show that investment advisers hold about 43% of professionally managed ETP shares and hedge fund managers another 28%, with Jane Street ($1.8 billion) and Millennium ($1.0 billion) the largest reported owners.
Demand for the building continued to outstrip new releases. Bitwise noted in their report that ETPs and public companies combined have bought about 3.6 times the amount of bitcoins mined since ETFs began issuing — about 1.55 million BTC of demand versus just 455,416 BTC of new supply.
Treasury companies continue to buy, but the Strategy is blinking
The public company’s bitcoin wealth grew to 1.28 million BTC, up 11.3% quarter over quarter and equal to 6.11% of the 21 million cap, as the number of bitcoin holding firms decreased by three to 184. Companies added 130,467 BTC in Q2. Strategy remains the Runaway leader at 846,842 BTC, followed by XXI (43,514), Metaplanet (40,177), MARA Holdings (35,303) and Bitcoin Standard Treasury Company (30,021).
The most iconic move was for Strategy, which sold bitcoin for the first time since 2022 — cashing out $218 million at the end of the quarter to fund equity obligations while keeping about $52.3 billion in cash and $2.55 billion in reserves. Falling prices have punished the equity hard: Strategy (MSTR) stock is down 30.3% in Q2 and 42.8% year to date, making it one of the worst performers among crypto stocks.
The report also touched on several developments that are reshaping the bitcoin market pipeline. The CFTC has approved the first perpetual bitcoin futures on a US-regulated exchange, Kalshi, which is pulling one of the main crypto derivatives offshore.
Charles Schwab launched a BTC trading platform, and E*Trade expanded access to its 8.6 million users. On the regulatory side, the market structure’s CLARITY Act stalled in the Senate regarding ethics provisions, with markets predicting its 2026 pass rates to be about 20%, down from 75% in May.
Bitwise asserts that if CLARITY passes it will likely mark the bottom, and if it fails the industry continues to build under friendly regulators.
Hougan’s core argument is one of cyclical progress. Seasonal data for Bitcoin offers little hope on the horizon, with July historically averaging a 10.7% gain.
And the firm’s portfolio performance still shows a 5% bitcoin offering adding to the traditional 60/40 mix in 100% three-year exit windows since 2014.
“The market is quoting bear market prices in an industry that is twice as big as it was in the last round,” Hougan writes — the basis, he says, “that determines what grows in the spring.”
Bitcoin is trading below $62,000 today.
