3 Minutes
Institutions Replace Old Crypto Market Cycles, Says Bitwise CIO
Bitwise's Chief Investment Officer, Matt Hougan, has announced a paradigm shift in the cryptocurrency market, declaring the classic four-year crypto cycle obsolete. According to Hougan, the market’s driving forces are evolving, with institutional adoption and regulatory developments now shaping the future of digital assets rather than previous cyclical patterns.
Key Factors Weakening the Traditional Crypto Cycle
Hougan points to three crucial factors behind this transformation: diminishing influence of Bitcoin halvings, increasingly favorable macroeconomic trends for digital assets as interest rates align with crypto markets, and the overall reduction in severe downturn risks due to enhanced regulation and robust institutional involvement.
He explained on X (formerly Twitter) that these changes are replacing the shorter, boom-and-bust cycles with longer, more sustained growth trends. Hougan emphasized that improvements in crypto regulation and institutional investment are stabilizing market dynamics, making rapid, large-scale corrections less likely.
Long-Term Trends: Institutional Investment and Regulation
One of the biggest catalysts for this new market phase is the migration of assets into cryptocurrency ETFs, a trend Hougan identifies as potentially lasting five to ten years, having started in 2024. As more crypto ETFs receive approval from major regulatory bodies worldwide, institutional participation is set to grow exponentially. Large-scale investors like pension funds and endowments are only now beginning to explore crypto assets seriously.
The shift is being fueled by regulatory milestones, such as legislation like the GENIUS Act, which are expected to sustain and expand Wall Street’s crypto infrastructure investments over the coming years.
During a notable conversation with crypto analysts Kyle Chassé and James Seyffart, Hougan projected that 2026 is likely to mark a strong year for digital assets, with ongoing volatility but a persistent upward trend. He described the current environment as a “sustained steady boom” instead of past super-cycles.
Muted Volatility and a New Crypto Market Landscape
While some analysts believe traditional crypto cycles may persist with lesser intensity, Hougan contends that rising institutional interest and stringent compliance standards—now requiring extensive due diligence and lengthy onboarding processes—are fundamentally restructuring the market. Seyffart concurs that institutional players help stabilize crypto markets, reducing extreme price fluctuations.
Institutions that began their Bitcoin ETF evaluations at launch are expected to finalize their due diligence by the end of 2025, setting the stage for major allocations in 2026. This process, Hougan asserts, will result in unprecedented capital flows into cryptocurrencies over the next two years, definitively breaking the old four-year cycle paradigm.
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