The current overall cryptocurrency market continues to weaken, with market pressure, sluggish funds, and receding hotspots. But beneath the surface weakness, there are three major structural, trending, and disruptive changes happening within the market. The latest market memo from Bitwise points out that this round of market trend is not simply a cyclical downturn, but a comprehensive reconstruction of investment logic, regulatory expectations, and fund preferences, laying a new layout mainline for the next bull market.

1、 Core logic switch: Encryption shifts from the "momentum track" to the "reverse value track"

Since 2026, the overall returns of cryptocurrency assets have significantly retreated, and market pessimism has spread. Data shows that Bitcoin has fallen by 21% this year, while mainstream public chain currencies such as Ethereum, Solana, and XRP have experienced even deeper declines, recording declines of 33%, 37%, and 31% respectively. With the downward trend in prices, Bitcoin ETFs continue to experience capital outflows, and spot trading volume in the market has fallen to a recent low. The cryptocurrency market has completely bid farewell to its previous strong trend.

The core reason for the outflow of funds in this round is not the fundamental collapse of the cryptocurrency industry, but the cross market fund siphon effect. The current technology market in the US stock market is booming, with the Nasdaq 100 index rising 43% within the year. Frontier assets such as AI concept stocks, robotics industry, SpaceX continue to emerge from the main uptrend, and incremental funds in the market are pouring into the technology growth track. In contrast, the popularity of encrypted assets is rapidly declining and is no longer the preferred target for market funds.

This change has brought about the most critical iteration of investment logic in this cycle: the cryptocurrency market has officially transitioned from the era of momentum investment to the era of reverse investment.

In the past bull market cycle, the market relied on emotions, hot topics, and narrative rotation. As long as the track market started, most assets could follow suit and rise, belonging to the momentum market of "making money with the flow". The investment experience was easy and the profit certainty was strong. The current reverse market, with no trend dividends, no emotional premiums, and returns no longer come from chasing after trends, but from fundamental exploration, value depression judgment, and long-term patient holding.

This also explains the significant characteristics of the current market: funds no longer blindly speculate on themes, but instead have an extreme preference for high-quality targets that are truly implemented, have traceable data, and have closed-loop performance. The protocols represented by Hyperliquid, which have clear fundamentals and stable cash flow, continue to be favored by funds, marking the official departure of the cryptocurrency market from pure emotional speculation and entering a new stage of value pricing.

It is worth emphasizing that the cooling of the track heat does not mean the industry has cleared up, but rather a complete change in the market screening logic, and the investor structure has gradually shifted from short-term speculators to long-term value allocators.

2、 Regulatory expectations uncertain: continued uncertainty suppresses market rebound potential

The second major core factor contributing to the sustained downturn in the market is the high uncertainty surrounding the implementation of the US cryptocurrency regulatory framework. As the most crucial foundational legislation in this round of the industry, the CLARITY Act determines the future rules for cryptocurrency compliance, trading, classification, and access in the US market, and is the institutional cornerstone for the long-term development of the industry.

Although the bill has completed a partial vote in the Senate, market expectations for its implementation within the year are extremely divided. Polymarket forecast data shows that the probability of the bill being implemented within the year is only 55%. The industry insiders in Washington that Bitwise is in contact with have more conservative expectations: the Democratic industry estimates a landing probability as low as 5%, while the Republican industry's highest estimate is only 30%. Based on various sources of information, the probability of the bill being implemented safely within this year is extremely low.

Compared to the final passage or repeal of the bill, the long-term uncertainty that remains unresolved is the core bearish factor that suppresses the market.

From the perspective of institutional funding, there is a clear gap in cost-effectiveness in the current market: the AI and technology equity market continues to reach new highs, with clear trends and controllable risks; However, encrypted assets are constrained by regulatory uncertainty and have extremely poor short-term risk return ratios. Before the institutional framework is fully implemented, institutions lack the underlying logic for large-scale entry, making it difficult for top cryptocurrency assets to initiate a sustained trend market. Only when the regulatory dust settles, whether the outcome is positive or negative, can the market completely clear expectations and restart the market.

3、 Capital preference reconstruction: bear market ending, niche fundamental assets emerge from independent market trends

This bear market has shown completely different characteristics from historical cycles, which indirectly confirms that the current market is approaching the end of the bear market.

In previous cryptocurrency bear markets, the market has shown a typical pattern of "overall decline", with safe haven funds flocking to Bitcoin, and small and medium-sized currencies and niche assets collapsing across the board. But the capital logic of this cycle has completely reversed: mainstream market currencies continue to weaken, and small and medium-sized assets with independent fundamentals have emerged from independent markets against the trend.

The monthly market data clearly confirms this trend: top currencies such as Bitcoin, Ethereum, Solana, etc. continue to adjust, while a group of niche fundamental indicators break through strongly. Among them, Hyperliquid surged by 72% in a single month, Zcash rose by 50%, Stellar rose by 44%, and BNB closed up 17% against the trend.

These assets are not short-term emotional speculation, but rely on their unique fundamentals, ecological advantages, and value logic to gain sustained funding support. This is the concrete manifestation of the reverse investment logic: the market no longer pursues the narrative and hot topics of the market, but accurately excavates real performance, landing ecology, and differentiated value.

Bitwise emphasizes that a general market downturn is a characteristic of a deep bear market, while structural market differentiation is a signal of the end of the cycle. When some high-quality assets can break away from the overall market and emerge from an independent upward trend, it means that market selling pressure has been fully released, and funds have begun to actively layout future opportunities. The turning point of the cycle is approaching.

Conclusion: In the reverse era, patience and fundamentals are the only dividends

In the short term, the cryptocurrency market will continue to be under pressure. The AI industry continues to attract funds, expectations of SpaceX and Anthropic going public are heating up, and regulatory laws are delaying implementation. Multiple factors are suppressing market sentiment, resulting in a poor sense of short-term consolidation.

But from a cyclical perspective, the market has completed a core logic reconstruction: shifting from emotional speculation to value pricing, and from following the trend to reverse layout. The current downturn is not a decline in the industry, but a stage of accumulating momentum for a new round of market trends.

In the new market cycle, abandoning hotspots and following trends, adhering to fundamental exploration, and maintaining patience and resilience are the core keys to overcoming volatility and capturing the dividends of the next bull market.