In a brand new investor be aware printed on January 29, 2025, Matt Hougan, Chief Investment Officer at Bitwise, questioned whether or not the historic four-year market cycle of Bitcoin might lastly be coming to an finish. His reasoning is rooted in seismic shifts in US coverage towards crypto, highlighted by a latest government order from President Trump aimed toward solidifying the nation’s management in digital belongings.
Could 2026 Buck The Bitcoin Bear Trend?
Hougan’s note begins with an evidence of the so-called “four-year cycle,” the place Bitcoin has usually seen three years of considerable positive factors adopted by a pullback. This cycle, he explains, mirrors broader boom-bust patterns in conventional markets:“The four-year cycle in crypto is driven by the same forces that drive broader cycles of growth and recession in the general economy,” he wrote.
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These expansions, fueled by technological breakthroughs or elevated investor curiosity, usually result in over-leverage, sometimes leading to fraud or industry-wide pressure. Eventually, one thing “breaks” and triggers a market correction—such because the 2014 Mt. Gox collapse or the 2018 SEC crackdown on ICOs.
Hougan describes the present crypto upswing because the “Mainstream Cycle,” rising out of 2022’s “massive deleveraging” attributable to failures like FTX, Three Arrows Capital, and others. According to him, the most recent bull section took off in March 2023, when Grayscale convincingly “won the opening argument” in its authorized problem towards the SEC over a spot Bitcoin ETF.
“Bitcoin was trading at $22,218 when Grayscale mounted its argument. It’s trading at $102,674 today. The mainstream era has arrived.” Once a spot Bitcoin ETF was accepted and launched in January 2024, investor inflows surged, additional cementing Bitcoin’s acceptance amongst each retail and institutional gamers.
The most putting element of Hougan’s evaluation is his examination of final week’s government order issued by President Trump. The order not solely deemed the event of the US digital asset ecosystem a “national priority,” however it additionally set in movement a clearer regulatory framework for crypto.
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“Last week, President Trump issued an executive order that was so overwhelmingly bullish for the space that it’s making me wonder,” Hougan wrote, noting how the doc outlines plans for a possible “national crypto stockpile” and encourages banks and monetary establishments to speed up their adoption of digital belongings.
Combined with a now extra welcoming stance from the SEC, Hougan believes these measures might unleash trillions in new funding over the approaching years, far surpassing the a whole lot of billions that an ETF-driven market was already anticipated to generate.
Hougan’s evaluation acknowledges that Bitcoin has traditionally adopted its sample of eventual pullbacks after surging bull runs. But with Wall Street behemoths and main banks getting ready to combine crypto at each degree, there’s a rising chance that the market could not face the standard plunge in 2026: “If it’s not until next year that we feel those impacts, will we really have a new ‘crypto winter’ in 2026?” he posited. “If BlackRock CEO Larry Fink is calling for $700k Bitcoin, are we really going to see a 70% pullback?”
While he concedes that leverage continues to construct within the system—citing an uptick in Bitcoin-backed lending packages, derivatives, and levered exchange-traded merchandise—he additionally highlights an more and more numerous pool of crypto buyers. This variety, he argues, might dampen extreme drawdowns. “My guess is that we haven’t fully overcome the four-year cycle. Leverage will build up as the bull market builds. Excess will appear. Bad actors will emerge. And at some point, there could be a sharp pullback when the market gets over its skis,” Hougan argued.
However, Hougan expects that any future market correction will likely be “shorter and shallower” than earlier cycles. With the {industry}’s infrastructure now considerably extra sturdy and mainstream individuals treating crypto as a official asset class, a dramatic bear market akin to these of 2014 or 2018 could also be much less possible. “As for now, it’s full steam ahead,” he concluded. “The crypto train is leaving the station.”
At press time, BTC traded at $105,275.
Featured picture created with DALL.E, chart from TradingView.com
