In a worldwide investor survey carried out by Coinbase Institutional and Glassnode, 1 in 4 establishments agree that cryptocurrencies are at present in a bear market. Nonetheless, the vast majority of establishments nonetheless mentioned Bitcoin is undervalued, and most mentioned that they had maintained or elevated their publicity since October.
This discrepancy is essential as a result of it captures the present place of monetary establishments: institutional wariness, a want to take care of allocations, and a choice to pay attention danger in Bitcoin quite than smaller, extra unstable tokens that may be rapidly unraveled when levered.
bear market label, price ticket bid
The market construction on this report explains why this paradox exists.
Though October’s deleveraging prompted important harm to altcoin worth developments, Bitcoin’s dominance remained largely unchanged, slowly declining from 58% to 59% in This autumn 2025.
This stability is essential as a result of it exhibits that the promoting shouldn’t be evenly distributed. This was extra of a long-tail washout than a widespread rejection of cryptocurrencies, with Bitcoin appearing extra like an asset to carry if you’re lowering danger however not breaking out of the class.
David Duong, Coinbase Institutional’s world head of analysis, provided a neat solution to reconcile the time period “bear market” with the “undervalued” perception in an interview. crypto slate.
His level was that whereas establishments usually use cycle labels to explain their programs and positions, ‘worth’ is a long-term evaluation tied to adoption, shortage, construction and coverage context.
“When monetary establishments assess the worth of Bitcoin, they appear past short-term worth fluctuations to components equivalent to adoption, shortage, improved market construction, and a clearer regulatory framework.
Traditionally, bear markets usually sign durations of tight liquidity and weakening sentiment, in the end laying the muse for brand new institutional investor participation and future development.
In different phrases, when traders name this a bear market (which, by the way in which, shouldn’t be our view), they’re describing the stage of the cycle and basic danger urge for food.
Positioning could also be defensive, liquidity could also be selective, and worth motion could also be trending down or chopped with damaging skew.
They’re speaking in regards to the regime we’re at present buying and selling in, not the place they suppose Bitcoin ought to find yourself. ”
The report’s personal information are according to that interpretation. This exhibits that the market has stopped rewarding indiscriminate risk-taking, however shouldn’t be shedding bids for the largest property.
Coinbase and Glassnode mentioned perpetual futures have been hit the toughest, with the systematic leverage ratio dropping to three% of whole crypto market capitalization (excluding stablecoins).
On the similar time, choices open curiosity soared as merchants scrambled to guard towards additional worth declines.
As an organization, if we instinctively inform it is a bear market, we nonetheless keep the publicity we would like by means of insurance coverage, mitigating liquidation danger, and methods to keep away from being pressured out on the worst attainable time.
From monitoring to safety
A simple mistake to make right here is to deal with “undervaluation” as a single valuation mannequin shared by everybody.
In actuality, each the report and Duong describe a set of assumptions that resemble a market construction greater than a correctly discounted money move argument.
Let’s begin with the modifications to derivatives.
In accordance with the report, the OI of BTC choices exceeds the OI of perpetual futures, and the 25-delta put-call skew is in optimistic territory throughout 30-day, 90-day, and 180-day maturities, however that does not occur in a market seeking to maximize upside by means of leverage.
It occurs in a market that’s keen to remain for the long run, however is decided to outline the dangers.
When requested what monetary establishments did after the October clearing reset, Duong defined the transition to the identical choice:
“Institutional curiosity in on-chain enlargement remained after the October reset, however in a measured and multi-venue method.
Moreover, institutional traders are more and more expressing their views by means of choices and foundation trades that present convexity or carry with out the identical liquidation danger that drove October’s strikes. ”
This final line is vital, exhibiting that establishments have modified the way in which they understand the revelations.
Choices buying and selling and foundation buying and selling aren’t methods that seize the headlines, however they are a method for technical books to remain within the recreation because the regime punishes excesses.
On-chain information tells the identical story.
In accordance with Coinbase and Glassnode, sentiment as measured by real-adjusted NUPL deteriorated from perception to nervousness in October and remained that method all through the quarter. It is actually not euphoria, nevertheless it’s not give up both.
The decline in real-adjusted NUPL signifies that the market has stopped paying for optimism however continues to be hanging on. This interpretation suits in a world the place traders see property as low cost relative to what they imagine to be at equilibrium, however could also be cautious in regards to the present state of affairs.
The report additionally notes that within the fourth quarter of 2025, BTC that moved inside three months rose by 37%, whereas BTC that didn’t transfer for greater than a 12 months fell by 2%, which the authors interpret as a distribution stage in late 2025.
Distribution does not should be a dying sentence if you wish to take the institutional perspective critically. This might imply massive holders derisking and gaining power, with the market now looking for the following holder to personal the availability with out the necessity for steady liquidity infusions.
Right here, the argument that Bitcoin is “undervalued” begins to turn out to be much less a few single truthful worth quantity and extra in regards to the perception that Bitcoin has turn out to be the one crypto asset that may soak up capital at scale with out the necessity for retail bidding to take care of its construction.
Mr. Duong clearly separated the Bitcoin underwriting framework from different cryptocurrency markets.
“In contrast to retail members, who usually deal with short-term worth actions and market cycles, monetary establishments worth Bitcoin’s long-term worth proposition over timing.
On this context, Bitcoin is more and more being handled as a strategic, retailer of worth asset and macro hedge, quite than a speculative token within the broader cryptocurrency world. ”
That is according to what the report says about massive and small shares.
Their topline outlook for Q1 2026 favors large-cap tokens, with small-caps nonetheless coping with the aftermath of October.
Given this, pondering Bitcoin is “undervalued” might not be a lot that Bitcoin is affordable by itself, however that it’s the solely crypto asset that establishments can deal with as a everlasting allocation when regimes are unfriendly.
Liquidity is the true cycle
The second pillar of the paradox is the time axis.
Calling one thing a bear market is normally a choice over a shorter timeframe, whereas calling one thing undervalued is commonly a choice over an extended time horizon. The bridge between the 2 is whether or not establishments nonetheless imagine that markets are dominated by a four-year clock, or whether or not they have moved to a macro framework the place liquidity, rates of interest and coverage play a lot of the roles.
In Duong’s view, the four-year cycle nonetheless exists as a reference level for habits, however instructional establishments will not be treating it as a strict mannequin.
He argued that controlling for the macro variables that drive all danger property would weaken the facility of the halving for monetary establishments.
“In conversations with these organizations, the four-year cycle continues to be a reference level, however primarily handled as a behavioral template quite than a tough mannequin.
They think about the place we’re in comparison with earlier cycle lows/highs, halving dates, and typical drawdown/restoration patterns. As a result of these ranges are essential for positioning and sentiment.
That mentioned, the proof that half-life causally drives every cycle is weak. There are solely 4 observations, that are largely confounded by main macro insurance policies and coverage modifications (e.g. quantitative easing, coronavirus stimulus).
Our 2026 outlook makes a transparent case that, controlling for liquidity, rates of interest and greenback actions, the financial relevance of the halving is considerably questionable. ”
The report notes that the patron worth index remained at 2.7% in December and cites the Atlanta Fed’s GDPNow forecasting actual GDP development of 5.3% within the fourth quarter of 2025. The report outlines a base case wherein the Fed cuts charges twice (totaling 50 foundation factors), that are priced into federal funds futures, which the authors see as a tailwind for danger property.
Additionally they warn that the job market is cooling, with 584,000 jobs added in 2025, in comparison with 2 million in 2024, and cite the introduction of AI as one of many mitigating components.
You needn’t perceive all of the macro reasoning to know what is going on on. The institutional view that Bitcoin is “undervalued” is constructed on macro and liquidity scaffolding quite than pure crypto cycle scaffolding.
Within the liquidity part of the report, which makes this clear with a customized world M2 index, Coinbase states that it leads Bitcoin by 110 days and exhibits a 0.9 correlation with BTC’s motion in lots of lookback home windows. When you settle for that framework, the paradox turns into simpler to grasp.
Wanting on the regime, trying on the scars from October, taking a look at a market that also needs draw back safety, we will conclude that Bitcoin is in a great place for the long run if coverage and liquidity work as anticipated.
Solely then will “bear market” symbolize at this time’s market habits, and “undervaluation” symbolize how the market will reprice when macro inputs flip extra supportive.
So what breaks this concept?
Duong rejected the concept routine pullbacks are ample, as a substitute pointing to clusters of macro and on-chain situations that should fail on the similar time.
“Monetary establishments will not be solely centered on worth, but in addition on the macro liquidity state of affairs and the construction of the on-chain market.
The clearest signal that they may be unsuitable wouldn’t be a routine retraction however a collapse of the idea’s elementary thrust.
In different phrases, it needs to be a cluster of indicators, not only one sign.
For instance, if macro liquidity situations decisively flip towards danger property, if on-chain accumulation metrics reverse, if long-term holders diversify on the weak facet, or if institutional demand metrics proceed to pattern negatively, the mix may meaningfully problem the view that Bitcoin is at present undervalued or structurally supported. ”
The survey’s numbers counsel that establishments are divided on the place the market is, however they agree on Bitcoin’s relative attractiveness.
The report’s graphs present how that perception is mirrored in precise positioning. It means much less reliance on weak leverage, extra use of choices for outlined dangers, and the market cooling down with out fully breaking out.
Mr. Duong’s reply provides connective tissue to this concept exhibiting that “undervaluation” shouldn’t be a verify on market temper, however a framework mounted in liquidity, construction, and length.
Whether or not monetary establishments are in the end proper will rely much less on profitable short-term debates over cycle labels and extra on whether or not their framework holds up when the following macro take a look at arrives.
