Bitwise Says Bitcoin’s “Floor Is Rising” Despite AI Boom and Crypto Delays

TLDR

• Bitwise said Bitcoin’s current bear market is milder than past cycles.
• Institutional Bitcoin buyers are using the downturn to add exposure.
• Some large investors are waiting for clearer U.S. crypto rules.
• Spot Bitcoin ETFs saw their worst quarterly outflows on record.
• Bitwise said stablecoin assets have roughly doubled since 2022.

Bitwise said Bitcoin’s current downturn looks different from earlier bear markets, as institutional buyers continue to add exposure while other large investors wait for clearer U.S. crypto rules.

Bitwise Says Institutions Are Buying the Bitcoin Dip

Bitwise Senior Investment Strategist Juan Leon said the firm’s institutional clients are split between active buyers and investors still waiting on regulation. He said clients who already built Bitcoin positions over the past two years are using the downturn to rebalance and dollar-cost average.

Leon said,

“In 2022, clients asked whether crypto would survive.” He added, “In 2026, they’re asking about entry points and position sizing. That’s a different conversation entirely.”

Bitwise described the current Bitcoin decline as the asset’s “mildest structural bear market” on record. Leon compared the current drawdown of about 50% with Bitcoin’s 78% drop in 2022 and its 84% decline in 2018.

He also said, “The floor is rising every cycle, and that’s not an accident.” Leon linked the change to Bitcoin’s holder base shifting from retail traders toward professional allocators.

AI Demand and Macro Pressure Slow Crypto Flows

Leon said Bitcoin could still face more downside, since earlier bear markets lasted about 12 to 13 months, while the current downturn has lasted about eight months. He pointed to sticky inflation, higher-rate expectations and geopolitical tension as pressures on risk assets.

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Bitwise also said enthusiasm around artificial intelligence has pulled capital away from crypto. Leon did not call AI a bubble, saying demand for compute infrastructure remains real and is already affecting Bitcoin miners.

Several public miners have expanded into AI and high-performance computing as demand for power and data center space increases. That shift has linked parts of the Bitcoin mining sector to the AI infrastructure trade.

Bloomberg has reported strong investor focus on AI infrastructure and data center demand, a trend that has competed with crypto for capital during the market downturn.

Crypto Market Shows Mixed Signals in Q2

Bitwise’s Q3 2026 Crypto Market Review said Q2 was difficult for digital assets. The Bitwise 10 Large Cap Crypto Index fell 15.4%, with eight of its 10 constituents posting losses.

Spot Bitcoin ETFs recorded their worst quarter of outflows on record. Onchain activity, trading volume and DeFi assets also declined, while crypto’s correlation with stocks rose.

At the same time, Bitwise listed several areas of growth. Prediction market volume reached $43.2 billion in Q2, nearly 18 times higher than a year earlier.

Tokenized real-world assets rose 50.3% this year to $32.89 billion. Stablecoins also continued to grow, with Bitwise saying they are settling more value than Visa and now hold more U.S. Treasuries than most countries.

Bitwise said some crypto applications are also generating large revenue. Hyperliquid, PancakeSwap and Aave each produced about $900 million in revenue over the past year.

The firm said the market is pricing crypto like a bear market even though the industry is larger than it was at the last cycle bottom. Ethereum transaction activity is up about 13 times from 2022, DeFi value locked is up more than 60%, and stablecoin assets have roughly doubled.