Bitcoin institutions finally admit this is a bear market – so why do 70% say the price is still undervalued?
In a international investor survey from Coinbase Institutional and Glassnode, 1 in 4 institutions agreed that crypto has now entered a bear market. Yet the majority of institutions still stated Bitcoin was undervalued, and most stated they’d held or elevated publicity since October.
That discrepancy issues as a result of it captures how institutions are positioning proper now: warning about the regime, a willingness to remain allotted, and a choice for concentrating danger in Bitcoin quite than in smaller, extra risky tokens that may unwind shortly when leverage comes out.
A bear market label, a worth bid
The report’s market framing explains why the paradox exists.
October’s deleveraging did actual injury to altcoin price motion, however Bitcoin dominance barely moved, edging from 58% to 59% in the fourth quarter of 2025.
That stability issues as a result of it reveals the promoting wasn’t evenly distributed. It was a washout in the lengthy tail greater than a broad rejection of crypto, with Bitcoin appearing like the asset you retain whenever you’re slicing danger however not exiting the class.
David Duong, Coinbase Institutional’s international head of analysis, supplied a clear option to reconcile the “bear market” language with “undervalued” conviction in an interview for CryptoSlate.
His level was that institutions usually use cycle labels to explain regime and positioning, whereas “worth” is a longer-horizon evaluation tied to adoption, shortage, construction, and the coverage backdrop.
“When institutions assess Bitcoin’s worth, they give the impression of being past near-term price motion to elements akin to adoption, shortage, bettering market construction, and clearer regulatory frameworks.
Historically, bear markets usually sign intervals of tighter liquidity and weaker sentiment that finally lay the basis for renewed institutional participation and future progress.
In different phrases, when an investor calls this a bear market (and that’s not our view, by the approach), they’re describing the section of the cycle and prevailing danger urge for food.
Positioning could also be defensive, liquidity is selective, and price motion may both be trending decrease or chopping with a unfavourable skew.
They’re speaking about the regime we’re buying and selling in proper now, not the place they assume Bitcoin ought to finally settle.”
The report’s personal knowledge strains up with that interpretation. It reveals a market that has stopped rewarding indiscriminate risk-taking however hasn’t misplaced the bid for the largest belongings.
Coinbase and Glassnode say perpetual futures were hit hardest, with their systematic leverage ratio falling to three% of the whole crypto market cap (excluding stablecoins).
At the similar time, options open interest spiked as merchants rushed to defend in opposition to additional price weak spot.
As an establishment, in case your intuition is that it’s a bear market, you purchase insurance coverage, cut back liquidation danger, and hold the publicity you still need by way of autos that received’t pressure you out at the worst doable time.
From perps to safety
The best mistake to make right here is to deal with “undervalued” as a single valuation mannequin that everybody shares.
In apply, each the report and Duong describe a bundle of assumptions that appears extra like market construction than a neat discounted money stream argument.
Start with what modified in derivatives.
The report says BTC choices OI has overtaken perpetual futures OI, with the 25-delta put-call skew in optimistic territory throughout 30-day, 90-day, and 180-day expiries, and that doesn’t occur in a market that’s making an attempt to maximise upside by way of leverage.
It occurs in a market that’s keen to remain lengthy, however decided to outline danger.
Duong described the similar migration to choices when requested what institutions did after October’s liquidation reset:
“Institutional curiosity in increasing on-chain remained after the October reset, however in a measured, multi-venue approach.
Moreover, institutions more and more expressed views through choices and foundation trades, which give convexity or carry with out the similar liquidation danger that drove the October transfer.”
That final line is the key, and it reveals that institutions modified how they take publicity.
Options and foundation trades aren’t headline-making methods, however they’re how a skilled ebook stays in the sport when the regime punishes overextension.
On-chain knowledge is telling the similar story.
Coinbase and Glassnode say sentiment, as measured by entity-adjusted NUPL, deteriorated from Belief to Anxiety in October and stayed there by way of the quarter. While that’s actually not euphoric, it isn’t capitulation both.
The drop in entity-adjusted NUPL reveals the market stopped paying you for optimism, however is still hanging round. This interpretation suits a world the place traders may be cautious about the present section whereas still seeing the asset as low-cost relative to the place they assume the equilibrium sits.
The report additionally notes that, in the fourth quarter of 2025, BTC that moved inside three months rose by 37%, whereas BTC that remained unmoved for greater than a 12 months fell by 2%, which the authors interpret as a distribution section late in 2025.
If you need to take the institutional viewpoint critically, distribution doesn’t must be a dying sentence. It can imply giant holders de-risked into energy, and the market is now looking for the subsequent set of fingers that may personal provide without having a fixed liquidity drip.
This is the place the declare about Bitcoin being “undervalued” stops being about a single fair-value quantity and begins being about the perception that Bitcoin has turn into the solely asset in crypto that may take up capital in dimension without having a retail bid to carry the construction collectively.
Duong explicitly separated Bitcoin’s underwriting framework from the remainder of the crypto market:
“Unlike retail individuals, who usually give attention to short-term price actions and market cycles, institutions place much less emphasis on timing and extra on Bitcoin’s long-term worth proposition.
In this context, Bitcoin is more and more handled as a strategic, store-of-value asset and macro hedge, quite than a speculative token inside the broader crypto universe.”
That maps onto what the report says about large-caps versus small-caps.
Their topline view for the first quarter of 2026 favors larger-cap tokens, with smaller caps still coping with October’s aftermath.
Given this, seeing Bitcoin as “undervalued” could also be much less about it being low-cost in isolation and extra about it being the solely crypto asset that institutions can deal with as a sturdy allocation when the regime is unfriendly.
Liquidity is the actual cycle
The second pillar of the paradox is the time horizon.
Calling one thing a bear market is normally a shorter-window judgment, whereas calling one thing undervalued is usually a longer-window judgment. The bridge between them is whether or not institutions still imagine the market is dominated by a four-year clock, or whether or not they have moved towards a macro framework the place liquidity, charges, and coverage do most of the work.
Duong’s view is that the four-year cycle still exists as a behavioral reference level, however institutions don’t deal with it as a exhausting mannequin.
He argued that the halving has much less energy for institutions when you management for the macro variables that drive all danger belongings:
“In our conversations with these entities, the four-year cycle is still a reference level, however largely as a behavioral template quite than a exhausting mannequin.
They’ll have a look at the place we’re relative to prior cycle lows/highs, halving dates, and typical drawdown/restoration patterns, as a result of these ranges matter for positioning and sentiment.
That stated, the proof that halvings causally drive every cycle is weak: we solely have 4 observations, they usually’re closely confounded by massive macro and coverage shifts (QE, COVID stimulus, and so on.).
In our 2026 Outlook, we explicitly argue the financial relevance of the halving is considerably specious when you management for liquidity, charges, and greenback dynamics.”
The report factors to December CPI holding at 2.7%, and cites the Atlanta Fed GDPNow projecting 5.3% actual GDP progress for the fourth quarter of 2025. It outlines a base case the place the Fed delivers the two fee cuts (50 bps whole) priced into fed funds futures, which the authors view as a tailwind for danger belongings.
They additionally flag a cooling jobs market, with 584,000 jobs added in 2025 versus 2 million in 2024, they usually identify AI adoption as one driver of that moderation.
You don’t want to purchase each macro inference to see what’s occurring: the institutional view of Bitcoin being “undervalued” is constructed on a macro-and-liquidity scaffold quite than a pure crypto-cycle scaffold.
The report’s liquidity part makes that specific with a customized Global M2 index that Coinbase says leads Bitcoin by 110 days and reveals a 0.9 correlation with BTC’s strikes throughout many look-back home windows. If you settle for that framing, the paradox turns into simpler to grasp.
You can have a look at the regime, see the scars from October, see a market that still needs draw back safety, and still conclude that Bitcoin sits in a favorable long-duration setup if coverage and liquidity do what you anticipate them to do.
Only then does “bear market” turn into a description of how the market behaves immediately, and “undervalued” turns into a assertion about how that market reprices as soon as the macro inputs flip extra supportive.
So what would break this thesis?
Duong rejected the concept that a routine pullback can be sufficient and as an alternative pointed to a cluster of macro and on-chain situations that must fail collectively:
“Institutions aren’t anchoring on price alone, they’re anchoring on macro liquidity situations and onchain market construction.
The clearest sign that they may be mistaken wouldn’t be a routine pullback, however a breakdown in the elementary drivers of that thesis.
In different phrases, it wouldn’t be one sign alone, however it must be a cluster of indicators.
For instance, if macro liquidity situations have been to show decisively in opposition to danger belongings, if onchain accumulation metrics have been to reverse, if long-term holders have been distributing into weak spot, and if institutional demand indicators have been to pattern persistently unfavourable, that mixture may meaningfully problem the view that Bitcoin is undervalued or structurally supported at current.”
The survey numbers counsel institutions are break up on what section the market is in, however aligned on Bitcoin’s relative attraction.
The report’s charts present how that perception expresses itself in actual positioning: much less reliance on fragile leverage, extra use of choices for outlined danger, and a market that has cooled with out totally breaking.
Duong’s solutions add connective tissue to this thesis that reveals “undervalued” is a framework anchored to liquidity, construction, and time horizon, not a vibe verify of the market.
Whether institutions find yourself proper relies upon much less on successful a short-term argument about cycle labels and extra on whether or not that framework holds collectively when the subsequent macro check arrives.
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