What Will Spark the Next Bitcoin Bull Market? Bitwise CIO Names 4 Factors

Bitcoin has continued its dip, dropping to around $65,500 today. However, Bitwise CIO Matt Hougan said early signs of a future Bitcoin Bull Market are starting to emerge. He pointed to four developments, including agentic finance, institutional DeFi, quantum security progress, and faster tokenization efforts.

Bitwise CIO Lists Developments that Could Drive a Bitcoin Bull Market

Bitwise CIO Matt Hougan said markets remain weak, but he sees “positive data points” forming beneath the surface. First, he said the rise of agentic finance could play a major role. He referenced Coinbase’s announcement of “Agentic Wallets,” built for autonomous agents to manage on-chain activity.

Coinbase said the wallet infrastructure allows agents to hold identity, manage funds, and transact without human intervention. It also supports programmable spending policies, non-custodial identity, and secure permissioned execution. Coinbase also said transactions are gasless on Base, allowing any token to be used.

Hougan also pointed to institutional DeFi, giving an example of BlackRock’s venture into Uniswap’s DeFi as another key trend. As CoinGape reported, BlackRock plans to launch its BUIDL token on Uniswap. BlackRock will purchase an undisclosed amount of UNI tokens as part of the move.

The third factor involved quantum risk progress. Today, Bitcoin Improvement Proposal 360 merged into Bitcoin’s official BIPs repository. The proposal aims to strengthen Bitcoin against future quantum threats.

Tokenization was the fourth trend Hougan cited. He said major institutions continue pushing tokenization projects. Last week alone, tokenization activity expanded following announcements from CME, Broadridge, and UBS regarding related initiatives.

Santiment Flags Extreme Short Positioning Similar to August 2024

Bitcoin’s price decline has also led to shifts in derivatives positioning. Santiment said aggregated funding rates across crypto exchanges have turned deeply negative, noting that the current short positioning is the most extreme since August 2024.

Santiment said August 2024 marked a major Bitcoin bottom. Funding rates dropped heavily negative at that time as traders expected more downside. Instead, the market reversed, and Bitcoin gained about 83% over the next four months.

Santiment explained that funding rates help keep perpetual futures prices aligned with spot markets. When rates turn negative, short sellers pay long traders. That usually indicates traders are heavily positioned for further declines.

Notably, Santiment said extreme negative funding can lead to fast rebounds through short squeezes. Many shorts use leverage, so rising prices can quickly force liquidations. As exchanges close those positions, forced buying can accelerate upward moves.

Santiment also referenced Binance’s October 10, 2025, liquidation event. After long liquidations pushed Bitcoin lower, traders increased short exposure. It said current funding data reflects a similar imbalance across exchanges. 

El Salvador’s Bitcoin Losses Give Context of Weak Bitcoin Positioning

As per Bloomberg data, Bitcoin’s crash has reduced El Salvador’s holdings by roughly $300 million. The report said President Nayib Bukele continues buying Bitcoin despite the losses. However, Bloomberg said the decline has increased credit risk and intensified bond volatility.

The Bloomberg report added that El Salvador’s Bitcoin strategy is complicating negotiations for a $1.4 billion IMF loan. It also said investors remain concerned as major debt payments approach. The report noted that analysts warned that delayed pension reforms and continued crypto buying could weaken IMF support.