Crypto has been in a prolonged winter since the start of 2025, even if much of the market has been reluctant to label it as such, asset manager Bitwise said in a Monday blog post.

The firm said today’s bleak sentiment resembles the later stages of previous downturns, indicating the market may be closer to a bottom than the beginning of a new decline. After more than a year of falling prices, Bitwise expects the recovery to arrive “sooner rather than later.”

Crypto winters are extended bear markets marked by sharp price declines, deteriorating sentiment, and widespread apathy toward positive developments. They typically follow periods of excessive leverage and speculation and have historically lasted about a year from peak to trough.

In past cycles, including 2018 and 2022, regulatory progress and growing adoption did little to arrest losses during the depths of the downturn. Instead, Bitwise said, crypto winters have tended to end quietly, as selling pressure fades and prices stabilize ahead of the next expansion.

Digital asset prices have fallen sharply across the board. Bitcoin is down roughly 39% from its October 2025 high, ether has lost more than half its value, and many major tokens have suffered significantly deeper drawdowns.

Bitwise Chief Investment Officer Matt Hougan said the current move is not a routine correction but a 2022-style selloff driven by excess leverage and profit-taking, overwhelming even a steady flow of constructive news.

Recognizing the environment as a true crypto winter helps explain why positive developments, from regulatory momentum to institutional adoption, have failed to lift prices, Hougan said.

At market lows, fundamentals typically matter less, he added. Crypto winters tend to end not with renewed optimism but with exhaustion, when sellers finally step away.

While previous crypto winters have lasted roughly 13 months from peak to trough, Hougan believes this cycle effectively began in January 2025, even though the market did not fully acknowledge it at the time. Heavy inflows into spot bitcoin exchange-traded funds and digital asset treasury strategies helped support a narrow set of institutionally accessible assets, masking a deeper bear market in retail-focused tokens.

According to Bitwise, assets with strong institutional backing posted relatively modest declines in 2025, while tokens lacking ETF or treasury demand fell by 60% or more. The firm estimates institutional vehicles absorbed over 740,000 bitcoin during the period, providing tens of billions of dollars in price support and preventing steeper losses.

Despite the prevailing pessimism, Bitwise said crypto’s underlying fundamentals remain intact. Regulatory progress, Wall Street adoption, stablecoins, and tokenization continue to advance, even as markets largely ignore them.

Those developments are building latent pressure that could fuel a sharp rebound once sentiment turns, the firm said.