In a recent global investor survey conducted by Coinbase Institutional and Glassnode, a significant trend has emerged among institutional investors regarding their perception of the cryptocurrency market. Approximately 25% of institutions surveyed acknowledged that the crypto market has entered a bear phase. However, despite this classification, a larger proportion views Bitcoin as undervalued, and many have either maintained or increased their exposure to it since October.
This contradictory sentiment highlights how institutions are navigating the current market landscape. While there is caution regarding the prevailing market conditions, a notable willingness exists to continue holding Bitcoin, as opposed to smaller, more volatile cryptocurrencies that are prone to drastic declines when liquidity issues arise.
The survey illustrates a stark difference in market dynamics. October’s market deleveraging adversely impacted the prices of many altcoins, yet Bitcoin’s price remained relatively stable, with its market dominance rising slightly from 58% to 59% in the final quarter of 2025. This stability suggests that the sell-off was predominantly concentrated in smaller tokens rather than indicating a widespread rejection of cryptocurrency.
David Duong, the global head of research at Coinbase Institutional, provided insights into how institutions reconcile the terms “bear market” and “undervalued.” He noted that institutional investors typically assess market regimes and positions using cycle labels, while their views on value extend over a longer horizon, based on factors like adoption, scarcity, and regulatory clarity. His perspective highlights that bear markets can often precede renewed institutional interest, suggesting that current tightening in liquidity and weakened sentiment could set the stage for future growth.
The report also noted that institutional sentiment had evolved after the October market adjustments, with many investors opting to hedge their exposure through options rather than relying on leverage, which has significantly decreased. Data indicated that open interest in Bitcoin options had surpassed that of perpetual futures, indicating a shift in strategy among institutional players. The positive skew in the 25-delta put-call ratio reflects a market environment more focused on managing risks rather than maximizing potential upside.
Furthermore, the report detailed shifts in trading behavior, revealing that while institutional investors have remaining interest in expanding on-chain activity, they are doing so in a measured manner that emphasizes risk management. This strategic pivot is underlined by institutions utilizing options and basis trades to maintain exposure without incurring the liquidation risks that characterized the previous bear market.
On-chain data reinforced this cautious sentiment. The analysis demonstrated a drop in the entity-adjusted Net Unrealized Profit/Loss (NUPL) ratio, illustrating a transition from optimism to anxiety among investors. Although the sentiment was not drastic enough to indicate full capitulation, it does highlight a market environment where investors remain tentative while still recognizing the potential value in Bitcoin.
Additionally, the report found that a sizeable amount of Bitcoin that had moved within the last three months rose by 37%, in stark contrast to the 2% decline of Bitcoin that remained dormant for over a year. This divergence suggests a distribution phase in the market, wherein larger holders were potentially offloading assets into relative strength, emphasizing a search for stable ownership.
Duong also articulated a broader institutional perspective, separating Bitcoin from the surrounding crypto market. While retail investors often fixate on short-term market movements, institutions are increasingly viewing Bitcoin as a strategic asset with long-term value. This distinction posits Bitcoin not just as a speculative investment but as a macro economic hedge.
The report projected that larger-cap cryptocurrencies would benefit in the market recovery, while smaller-cap tokens would still be grappling with the aftermath of the prior liquidation. Thus, the perception of Bitcoin being “undervalued” is less about it being cheap in isolation and more about it being the only crypto asset seen as durable enough for institutional allocation during hostile market conditions.
Examining the macroeconomic backdrop, the report underscored that while the bear market term may represent a current sentiment, the longer-term notion of undervaluation is rooted in expectations related to liquidity, policy, and macroeconomic conditions. Institutions are not merely reacting to short-term price movements; they are assessing broader liquidity trends and structural market dynamics.
Duong pointed out that for institutions, a breakdown of the fundamental drivers believed to support Bitcoin’s value would not manifest through a mere market pullback, but rather through a confluence of negative macroeconomic indicators and shifts in on-chain metrics. This indicates a complex interplay between institutional strategies and evolving market conditions as they navigate the current and future landscapes.
Overall, the survey indicates that while institutions remain divided on the market’s current phase, there is a consensus on Bitcoin’s relative attractiveness as an investment. As institutional investors shift towards less reliance on fragile leverage and embrace risk-managed strategies, the ongoing evolution in their approach to Bitcoin may hint at a more nuanced understanding of its role within a changing economic environment.
