Crypto markets continued to sell off on Friday after more than $2 billion in leveraged positions were flushed out in the past 24 hours, but some institutional analysts say signs of a bottom are emerging, even if more pain is possible.
Speaking on CNBC, Bitwise CIO Matt Hougan said the sell-off is being driven by a classic clash between short-term fear and long-term conviction.
“It’s a tale of two markets,” he said. “Short-term investors see global risk-off sentiment, the DAT trade unwinding, and fallout from the October 10 volatility event. But long-term investors are starting to nibble at these prices.”
Hougan said several of the world’s largest allocators, including the Harvard endowment and Abu Dhabi’s sovereign wealth fund, are watching bitcoin’s retracement as a potential entry point. While he acknowledged that a move into the “mid or low 70s” is still possible, he argued the market is “closer to the bottom than the beginning of the pullback.”
Some investors are focused on the $84,000 area, which Hougan noted was the March pullback low and a level many traders still view as a potential base. Others believe prices could revisit the pre-Trump-election range near $70,000 after bitcoin’s run to an October all-time high of over $126,000 drew in new, less-convicted buyers who are now being shaken out.
Bitcoin (BTC) Price Chart. Source: The Block/TradingView
Hougan added that “pointing to any one factor is missing the boat,” but emphasized global liquidity being the dominant driver. “Crypto is down because global liquidity is down. The DAT trade is unwinding. Risk-off sentiment is emerging.”
A cleaner setup
Also a guest on CNBC, Cantor Fitzgerald’s chief equity and macro strategist Eric Johnston said the violent cross-asset selloff reflects a broader de-risking cycle that engulfed both bitcoin and crowded AI trades.
“We entered this with leverage in the system,” he said. “There’s been a significant hit, a significant de-risking, and now things are cleaner.”
On bitcoin specifically, Johnston argued that the asset’s ownership structure has shifted meaningfully since past drawdowns of 55% to 80% in prior cycles.
“There’s a lot more institutional ownership. Stablecoins have emerged. There’s legislation,” he said. “That has reduced — although not today — overall volatility.”
The path forward
Both analysts agreed that the longer-term outlook depends heavily on macro conditions.
Johnston said the prospect of Fed rate cuts and even quantitative easing in 2026 is “very favorable for bitcoin,” while Hougan emphasized that the “debasement trade” remains intact despite near-term liquidation pressure.
Neither dismissed the risk of further downside before a durable floor forms. Hougan suggested the most important variable is simply the timeframe.
“Could it go a little bit lower? Of course,” he said. “But for long-term investors looking out to 2026 and beyond, these are compelling entry points.”
The GMCI 30, which represents a selection of the top 30 cryptocurrencies, traded around 149.50 at publication time. The index is down abotu 12% over the past week and nearly 30% over the past month.
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