What Grayscale and Bitwise Analysts Are Saying About the Bitcoin Bear Market in August 2026

As of mid-August 2026, the Bitcoin bear market is roughly nine months old — technically Bitcoin's longest losing streak since 2022 — yet it is also the mildest structural downturn the asset has ever recorded. Two of the largest crypto asset managers, Grayscale and Bitwise, have both published detailed assessments of where the market stands. While neither firm is ready to call a definitive end to the bear market, both see compelling on-chain and macro evidence that a bottom is forming or has already arrived.

The drawdown itself is historically compressed. Bitcoin is trading roughly 49-50% below its October 2025 all-time high near $126,000, which is far shallower than the 78% plunge in 2022 or the 84% crash in 2018 . Bitwise Senior Investment Strategist Juan Leon described this as "the shallowest bear market structurally that Bitcoin has seen" .

Grayscale: Non-Zero Addresses Hit 57 Million, Bear Phase May Run to October

Grayscale head of research Zach Pandl has argued that the bear market may be approaching its final stages without a new bull run having begun. His primary on-chain signal: the number of Bitcoin addresses with a non-zero balance surged to approximately 57 million as of July 31, which he cites as a structural indicator of expanding network adoption that persists even during price weakness .

Pandl also points to macroeconomic tailwinds — rising government debt and persistent inflation — that could drive capital toward scarce assets like Bitcoin. He expects institutional involvement to rise significantly as ETFs mature, though he characterizes the current phase as a transition rather than a full recovery .

On timing, Grayscale published a note in late July suggesting the bear phase could persist until September or October 2026 before a clearer turning point emerges . Some analysts have challenged this call, noting that the Puell Multiple and MVRV ratio paint a more complex picture and that macro risks remain elevated .

Bitwise: "Floor Is Rising" as Institutions Absorb Bad News

Bitwise is more explicit in calling for a bottoming process, though CIO Matt Hougan and Senior Strategist Juan Leon both stop short of declaring a new bull market. Their argument centers on three core observations:

Price resilience to negative news. Hougan noted that Bitcoin absorbed a string of major bearish events throughout 2026 — the Coldcard hack, Strategy (formerly MicroStrategy) selling 1,690 BTC, Middle East geopolitical tensions, and record ETF outflows — without breaking below the $60,000 support level . This inability of bad news to trigger a deeper selloff is taken as evidence the market is "bottoming" rather than heading into another leg down .

Institutions are structurally raising the price floor. Bitwise argues that a broader institutional investor base — including financial advisers, family offices, pension plans, and sovereign wealth funds — is structurally lifting the price floor . Hougan told CoinDesk that trillions in institutional capital could flow into Bitcoin over the next decade as allocations move toward 1% of portfolios .

ETF outflows signaled capitulation, not abandonment. Spot Bitcoin ETFs recorded their worst quarter on record in Q2 2026, shedding $4.9 billion . Bitwise characterized this as consistent with capitulation-level selling rather than structural abandonment . By late July, global Bitcoin ETPs had returned to net inflows of +$93.2 million per week, suggesting the worst of ETF outflows may have passed .

Hougan said he expects Bitcoin to finish 2026 "significantly higher" but framed it as a structural turning point, not a technical confirmation of a new bull cycle . He also noted that old sell signals like "sell in May and go away" have not worked this cycle, and negative headlines are having less impact on price .

On-Chain Signals: Capitulation Persists, but Accumulation Is Underway

Broader on-chain data helps contextualize the asset managers' views. Glassnode's Bitcoin Cycle Composite — which condenses 45 on-chain indicators into a single 0-100 score — registered at 19.9 as of early August, firmly within the cold zone reserved for capitulation phases . Forty-one of those 45 indicators now sit in the bottom two quintiles of their historical cycle ranges, a zone that has historically preceded bottom formations .

At the same time, whale accumulation has been notable. One report documented a Whale Accumulation Trend Score of 0.68 (on a 0-1 scale), with approximately 270,000 BTC accumulated by large wallets in a single 30-day period — the largest monthly accumulation since 2013 . Long-term holders (addresses dormant 155+ days) held 78% of circulating supply .

However, participation metrics paint a mixed picture. The number of active Bitcoin addresses compressed to levels last seen during the 2018-19 bear cycle, with readings around 660,000 to 675,000 in early August 2026 . A separate analysis from February found that active addresses had fallen roughly 31% from mid-2025 levels .

Key Points of Agreement and Divergence

Theme	Grayscale	Bitwise
Drawdown severity	Not explicitly quantified but aligns with ~50% range	49-50% vs 78-84% in prior cycles; "mildest on record"
On-chain metric	57 million non-zero addresses as adoption signal	Not a primary metric in public comments
Price resilience	Acknowledged	Central argument: Bitcoin withstood 10+ bearish events
Institutional/ETF role	Seen as a structural shift reducing volatility	"Floor is rising" due to expanding institutional base
Macro outlook	Rising debt and inflation are tailwinds	Bitcoin "mispriced" relative to global money supply expansion
Timeline	Bear phase may end Sept-Oct 2026	Bottoming underway; expects higher by year-end but won't call a new bull run

The Caveats: This Is Not a Clear Bullish Signal

Neither firm is definitively calling the start of a new bull market. Grayscale's September-to-October timeline comes with the explicit acknowledgment that other on-chain metrics complicate the picture . Bitwise's own data shows three consecutive quarters of negative returns for its 10 Large Cap Crypto Index — the longest losing streak since 2022 . The Glassnode composite score still sits in capitulation territory, and active address participation remains depressed .

What both firms agree on is that the structure of this bear market is fundamentally different from prior cycles. Institutional access via ETFs, the growing involvement of long-term-focused capital pools, and the inability of severe negative news to trigger a deeper selloff have all combined to produce a downturn that is historically shallow and may be nearing its conclusion — even if the exact timing remains uncertain.