A TrustedStake Research Note | August 2026
For most of 2026, crypto has existed in a bear market. Prices fell, liquidity contracted, sentiment deteriorated, and increasingly bearish targets became consensus across social media. As is usually the case late in a bear market, the lower prices went, the lower investors expected them to continue going. Markets rarely bottom when everyone feels comfortable, however. They tend to bottom after leverage has been cleared, sentiment exhausted, longer-term technical structures reset, and underlying data starts improving before the narrative catches up. We believe there is growing evidence that this transition is now underway. That does not mean markets move higher in a straight line or that downside volatility disappears, but the balance of evidence looks increasingly different from the deterioration phase of the market.
TAO was among the first major crypto assets to peak and experienced one of the earliest and most severe repricings of the cycle. Leaders often lead in both directions: assets that recognize deteriorating conditions first can also be among the first to establish their bottoms when conditions begin changing. That may be exactly what we are seeing in Bittensor.
Before discussing TAO, we have to discuss Bitcoin. Regardless of which sector of crypto an investor ultimately wants exposure to, Bitcoin remains the primary liquidity anchor for the digital asset market. When Bitcoin's market structure deteriorates, higher-beta crypto assets generally struggle. When Bitcoin stabilizes, establishes a cycle low, and begins attracting liquidity again, the opportunity set farther out on the risk curve changes dramatically. Earlier this year, Bitcoin went through many of the characteristics we would expect during a major reset.
Among the signals we were watching:
Bitcoin ultimately traded into the high-$50,000s to low-$60,000s before sharply reversing. By late August, BTC had recovered above $80,000, a significant reversal from the lows. The important point is not simply that price rose, but where that move occurred within the broader market structure.
Major bottoms rarely consist of one indicator flashing green. Different parts of the market begin converging: long-duration technical indicators reset, weak holders sell, leverage is destroyed, supply moves from participants with short time horizons toward stronger holders, sentiment reaches extremes, and trading activity and public interest disappear. Eventually, the marginal seller becomes increasingly difficult to find. That is the environment from which sustainable recoveries can emerge.
A recurring mistake during these periods is extrapolating recent price action indefinitely. In 2022, a large portion of the market waited for Bitcoin to reach $12,000 or lower, and it never happened. During this cycle, expectations for $40,000 to $55,000 Bitcoin similarly became increasingly common even as several larger-timeframe indicators were already beginning to resemble a bottoming process. Markets do not need the majority to believe the bottom is in; in fact, they usually do not.
Crypto does not exist independently of global markets. Liquidity, interest rates, fiscal policy, currency conditions, equity-market breadth, and investor risk appetite all influence the environment in which digital assets trade. Several developments have recently become more constructive. Bitcoin's August recovery has coincided with renewed expectations surrounding U.S. Treasury liquidity, a weakening dollar, stronger demand for scarce or "hard" assets, and a resurgence in Bitcoin ETF flows.
Earlier this year, software equities represented by IGV were improving while the Russell 2000 began showing materially better relative strength, even while crypto remained deeply depressed. That divergence mattered as it shows breadth was returning to broader market again coupled with crypto being more correlated with the software sector (IGV) over the NASDAQ.