‘Bad news is already priced in’: Bitwise CIO sees possible exhaustion as bitcoin logs steepest two-week drop since June 2022

Bitcoin has faced a significant correction, recording its steepest two-week decline since the deep bear market of June 2022. The sharp sell-off, driven by a confluence of factors including slowing inflows into U.S. spot Bitcoin ETFs, rising geopolitical tensions, and global macroeconomic uncertainty, has tested critical support levels and shaken market confidence.

However, Matt Hougan, Chief Investment Officer at Bitwise Asset Management, offers a perspective of cautious optimism, suggesting the market is nearing a point of ‘exhaustion.’ Hougan posits that the primary negative catalysts that have fueled the recent slump—such as reduced expectations for Fed rate cuts, persistent inflation worries, and the immediate post-launch dip in ETF euphoria—are now largely ‘priced into’ the cryptocurrency’s current valuation.

According to Hougan, the severity and speed of the recent correction are telltale signs of capitulation, where sellers who intended to exit have largely completed their movements, leading to diminishing marginal returns for short pressure. This institutional assessment suggests that the risk/reward profile is shifting favorably for long-term holders. While he acknowledges that volatility is inherent in the asset class, the structural argument remains that further severe downward movement would necessitate the emergence of entirely new and unexpected negative systemic events.

Institutional analysts, including Hougan, view the recent decline as a necessary cleansing correction following the rapid run-up earlier this year, setting the stage for potential consolidation and a healthier long-term ascent once the short-term negative sentiment clears.

Source: ‘Bad news is already priced in’: Bitwise CIO sees possible exhaustion as bitcoin logs steepest two-week drop since June 2022