Bitcoin Price Unlikely To See A 77% Drawdown Again – Bitwise CIO

bitcoinistPublished on 2026-02-07Last updated on 2026-02-07

Abstract

Bitcoin has experienced significant recent declines, but Bitwise CIO Matt Hougan suggests the worst may be over. In a recent report, he cited multiple factors for the downturn, including market cycle dynamics, shifting investor attention to AI and metals, and the major liquidation event on October 10, 2025, triggered by U.S. trade policy. Other concerns included Federal Reserve leadership speculation and macro risk-off sentiment. However, Hougan notes that long-term holders have slowed selling, and derivatives open interest has dropped to 2024 levels. While further declines are possible, he believes Bitcoin is now a more mature asset and unlikely to repeat past 77% drawdowns. Bear markets, he concludes, typically end in exhaustion rather than excitement. Currently, Bitcoin is trading around $67,834, up over 4% in 24 hours.

The Bitcoin price has been on one of its worst runs in recent years, falling by double digits over the past week. While the premier cryptocurrency seems to be recovering well over the past day, the single-day 14% correction — on Thursday, February 5 — is an occurrence that has instilled fear in the market, and rightly so. In their latest report, a renowned pundit has tried to come up with answers to the questions currently swirling around the Bitcoin price.

Crypto Bear Markets End In Exhaustion, Not Excitement — Bitwise CIO

On Friday, February 6, Bitwise’s Chief Investment Officer, Matt Hougan, answered questions the about the current structure and outlook for the Bitcoin price. The senior executive wrote about why the market is down, if it would fall further, and what would help the BTC price reach a bottom.

Hougan started by noting that there is never a single reason why the crypto market fell, as multiple factors are often at play. In this latest correction, the Bitwise CIO listed about six contributing factors, including front-running the four-year cycle, the loss of “attention investor” to AI and metals, and the infamous October 10 liquidation event.

It is important to note that the market and the Bitcoin price action has not been the same since the significant leveraged blowout on October 10, 2025. This historical liquidation event came off the back of United States President Donald Trump announcing a surprise 100% tariff on all Chinese goods.

Other factors highlighted in the Bitwise’s report include concerns around Kevin Warsh as Federal Reserve chair, quantum computing fears, and macro risk-off sentiment. Notably, it could be said that Bitcoin and the crypto market are not the only victims of this sentiment shift, as mineral and stock markets have also seen significant declines.

Hougan mentioned the good news is that the sell-off signs appears to be showing signs of exhaustion.

The Bitwise CIO wrote:

According to onchain data, long-term holders have stopped selling aggressively, and some are beginning to nibble around the edges. Open interest on bitcoin derivatives exchanges has fallen to levels last seen in 2024.

Hougan went on to say that, if history is to go by, it is possible for the Bitcoin price to fall further in the current structure. However, the investment expert also believes that premier cryptocurrency is a more mature asset, and is less likely to see a 77% correction as in the past.

While he could not pinpoint the exact time the Bitcoin price would reach a bottom, the Bitwise CIO revealed that the catalyst that could turn things around is simply time. “Crypto bear markets tend to end in exhaustion, not excitement,” Hougan concluded.

Bitcoin Price At A Glance

As of this writing, the price of BTC stands at around $67,834, reflecting an over 4% jump in the past 24 hours.

The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView

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Related Questions

QAccording to Bitwise's CIO Matt Hougan, what are some of the factors that contributed to the recent Bitcoin price correction?

AThe factors include front-running the four-year cycle, the loss of 'attention investor' to AI and metals, the significant leveraged blowout on October 10, 2025, concerns around Kevin Warsh as Federal Reserve chair, quantum computing fears, and macro risk-off sentiment.

QWhat event on October 10, 2025, is cited as a major reason for the change in Bitcoin's market action?

AThe event was a significant leveraged blowout that occurred after U.S. President Donald Trump announced a surprise 100% tariff on all Chinese goods.

QWhat on-chain data does Hougan point to as a sign that the sell-off may be showing exhaustion?

AHe points to data showing that long-term holders have stopped selling aggressively and some are beginning to buy, and that open interest on bitcoin derivatives exchanges has fallen to levels last seen in 2024.

QDoes the Bitwise CIO believe a 77% drawdown in Bitcoin's price is likely to happen again? Why or why not?

ANo, he believes it is less likely because Bitcoin is now a more mature asset compared to the past.

QWhat, according to Matt Hougan, is the catalyst that typically ends a crypto bear market?

AHe states that crypto bear markets tend to end in exhaustion, not excitement, and that the catalyst to turn things around is simply time.

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