No More Bitcoin Bear Markets Ever? Fund CIO Explores New Market Reality

2 months ago

In a caller capitalist enactment published connected January 29, 2025, Matt Hougan, Chief Investment Officer astatine Bitwise, questioned whether the humanities four-year marketplace rhythm of Bitcoin could yet beryllium coming to an end. His reasoning is rooted successful seismic shifts successful US argumentation toward crypto, highlighted by a caller enforcement bid from President Trump aimed astatine solidifying the nation’s enactment successful integer assets.

Could 2026 Buck The Bitcoin Bear Trend?

Hougan’s note begins with an mentation of the alleged “four-year cycle,” wherever Bitcoin has typically seen 3 years of important gains followed by a pullback. This cycle, helium explains, mirrors broader boom-bust patterns successful accepted markets:“The four-year rhythm successful crypto is driven by the aforesaid forces that thrust broader cycles of maturation and recession successful the wide economy,” helium wrote.

These expansions, fueled by technological breakthroughs oregon accrued capitalist interest, often pb to over-leverage, occasionally resulting successful fraud oregon industry-wide strain. Eventually, thing “breaks” and triggers a marketplace correction—such arsenic the 2014 Mt. Gox collapse oregon the 2018 SEC crackdown connected ICOs.

Hougan describes the existent crypto upswing arsenic the “Mainstream Cycle,” emerging retired of 2022’s “massive deleveraging” caused by failures similar FTX, Three Arrows Capital, and others. According to him, the latest bull signifier took disconnected successful March 2023, erstwhile Grayscale convincingly “won the opening argument” successful its ineligible situation against the SEC implicit a spot Bitcoin ETF.

“Bitcoin was trading astatine $22,218 erstwhile Grayscale mounted its argument. It’s trading astatine $102,674 today. The mainstream epoch has arrived.” Once a spot Bitcoin ETF was approved and launched successful January 2024, capitalist inflows surged, further cementing Bitcoin’s acceptance among some retail and organization players.

The astir striking constituent of Hougan’s investigation is his introspection of past week’s enforcement bid issued by President Trump. The bid not lone deemed the improvement of the US integer plus ecosystem a “national priority,” but it besides acceptable successful question a clearer regulatory model for crypto.

“Last week, President Trump issued an enforcement bid that was truthful overwhelmingly bullish for the abstraction that it’s making maine wonder,” Hougan wrote, noting however the papers outlines plans for a imaginable “national crypto stockpile” and encourages banks and fiscal institutions to accelerate their adoption of integer assets.

Combined with a present much welcoming stance from the SEC, Hougan believes these measures could unleash trillions successful caller concern implicit the coming years, acold surpassing the hundreds of billions that an ETF-driven marketplace was already expected to generate.

Hougan’s investigation acknowledges that Bitcoin has historically followed its signifier of eventual pullbacks aft surging bull runs. But with Wall Street behemoths and large banks preparing to integrate crypto astatine each level, there’s a increasing anticipation that the marketplace whitethorn not look the accepted plunge successful 2026: “If it’s not until adjacent twelvemonth that we consciousness those impacts, volition we truly person a caller ‘crypto winter’ successful 2026?” helium posited. “If BlackRock CEO Larry Fink is calling for $700k Bitcoin, are we truly going to spot a 70% pullback?”

While helium concedes that leverage continues to physique successful the system—citing an uptick successful Bitcoin-backed lending programs, derivatives, and levered exchange-traded products—he besides highlights an progressively divers excavation of crypto investors. This diversity, helium argues, could dampen terrible drawdowns. “My conjecture is that we haven’t afloat flooded the four-year cycle. Leverage volition physique up arsenic the bull marketplace builds. Excess volition appear. Bad actors volition emerge. And astatine immoderate point, determination could beryllium a crisp pullback erstwhile the marketplace gets implicit its skis,” Hougan argued.

However, Hougan expects that immoderate aboriginal marketplace correction volition beryllium “shorter and shallower” than erstwhile cycles. With the industry’s infrastructure present importantly much robust and mainstream participants treating crypto arsenic a morganatic plus class, a melodramatic carnivore marketplace akin to those of 2014 oregon 2018 whitethorn beryllium little likely. “As for now, it’s afloat steam ahead,” helium concluded. “The crypto bid is leaving the station.”

At property time, BTC traded astatine $105,275.