According to CNBC, Bitcoin recently fell below $100,000, hitting its lowest price point since June and sparking fears of another prolonged crypto winter. Bitwise Chief Investment Officer Matt Hougan described the retail crypto market as being in “max desperation” mode with widespread leverage blowouts. However, he believes the market is close to hitting bottom from a sentiment perspective. Hougan pointed to continued institutional and financial advisor excitement about crypto allocations despite recent volatility. He even suggested that Bitcoin could reach new record highs before the end of the year, calling the current situation “a tale of two markets” where retail despair contrasts with institutional optimism.
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The Great Crypto Divide
Here’s the thing that makes this market so fascinating right now. We’re seeing what Hougan calls “max desperation” among retail traders – basically, the people who jumped in during the hype cycles and are now getting wiped out by leverage and panic selling. But at the exact same time, institutions and financial advisors are apparently still bullish. They’re looking at crypto as an asset class that’s delivered strong returns over the past year, and they’re not getting spooked by short-term volatility.
This creates a really unusual dynamic. Normally when retail capitulates, everyone runs for the exits. But what happens when the big money sees that retail panic as a buying opportunity? That’s essentially what Hougan is suggesting – that institutional demand could actually absorb the retail selling pressure and then some.
The Case for a Bottom
So why does “max desperation” potentially signal a bottom? Well, in market psychology, when the last of the weak hands finally throw in the towel, that’s often when the selling pressure exhausts itself. We’ve seen leverage blowouts, which means forced selling from margin calls. That creates a sort of cleansing effect where the market gets rid of excess speculation.
But here’s my question – is this time really different because of institutional involvement? In previous crypto cycles, when retail got wiped out, it took years to recover. Now we have Bitcoin ETFs, Wall Street involvement, and what Hougan describes as continued institutional excitement. That could fundamentally change the recovery timeline.
Bold Prediction Territory
Now, suggesting Bitcoin could hit new all-time highs before year-end is… well, let’s call it optimistic given current sentiment. We’re talking about needing roughly a 25% rally from current levels to break above the previous peak. That’s a big move in a short timeframe, especially with the Federal Reserve still fighting inflation and macroeconomic uncertainty everywhere.
But Hougan’s argument rests on this institutional wall of money theory. If financial advisors continue allocating to crypto ETFs and institutions see this dip as an entry point, the buying pressure could overwhelm the retail capitulation. Basically, the market structure has changed since the last crypto winter, and that might mean shorter, shallower downturns.
The real test will be whether this institutional support holds if prices keep dropping. Everyone’s brave when we’re 20% off highs – but what happens if we test 40% or 50% down? That’s when we’ll see if this “tale of two markets” narrative holds up.
