Bitcoin is trading far below its peak in 2025. There is a lot being said about cryptocurrencies. At this time the mood on Wall Street is extremely cautious. Historically, the crypto market has had three years of booms followed by a year of busts. Therefore, there is an expectation that the crypto market will experience a “crypto winter” in 2026. However, Bitwise Chief Investment Officer Matt Hougan is betting against history.
In a contrarian note to clients released late Monday, Hougan argued that the “four-year cycle”—the rhythmic boom-and-bust pattern that has defined Bitcoin’s price action since its inception—is officially dead. Instead of a bear market, he predicts 2026 will see the world’s largest cryptocurrency break new ground and set fresh all-time highs, driven by a fundamental reshaping of the market structure.
The Death of the Four-Year Cycle
For more than 10 years now, the Bitcoin community has watched and waited for the so-called “halving” cycle, an event that takes place every four years and reduces the newly created bitcoin supply by 50 percent. In the past, these halving events have usually resulted in a major increase in demand for bitcoin, followed by a correction period of approximately one year. These patterns were seen after the 2014, 2018, and 2022 halving events. With Bitcoin currently down more than 30% from its October 6 peak of approximately $126,000, many analysts have braced for history to repeat itself.
Hougan, however, contends that the forces driving this cycle are significantly weaker than in the past. The decreasing economic effect of the last half in that it represents just a smaller portion of the whole bitcoin supply from now on is driven by multiple factors. Furthermore, he highlights a shifting macroeconomic landscape: unlike the rising interest rate environments of 2018 and 2022, 2026 is expected to see falling rates, providing a tailwind for risk assets.
“The forces that once drove the cycle are now significantly weaker,” Hougan noted, citing a reduction in leverage-driven blowups following the record liquidations seen in October.
The Institutional “Trifecta”
The crux of Bitwise’s bullish thesis relies on what Hougan describes as a favorable “trifecta” for investors: strong returns, less volatility, and lower correlations to the stock market.
The rise of institutional investors is the biggest catalyst for what will be the next chapter of cryptocurrency. Hougan predicts that though 2025 will be when we see the first wave of ETFs approved, the real growth for the industry will occur during 2026, as these institutional players such as Morgan Stanley, Wells Fargo and Merrill Lynch will begin deploying significant amounts of client capital into cryptocurrency-related products. Additionally, the flow of funds into this sector is likely to increase owing to changes in regulation towards cryptocurrencies that are expected to happen under a future Trump administration, which will provide added incentive for fintech start-ups and large traditional Wall Street firms (JP Morgan, Goldman Sachs, etc.) to establish further relationships with digital assets.
Taming the Volatility Beast
One of the most unexpected things from Hougan’s outlook was the way Bitcoin moved. Contrary to Bitcoin’s traditional view as a highly-variable asset, when compared with Nvidia during Calendar Year 2025 (CY 2025), Bitcoin was found to have experienced lower volatility than Nvidia throughout CY 2025.
Hougan believes this is not a one-off occurrence but rather part of an ongoing trend resulting from increased “de-risking” of the asset class. As the investor base continues to shift from primarily high-leverage retail traders to larger amounts of institutional capital via exchange traded funds (ETFs), the extreme price movements seen in the past will be reduced. Bitwise is anticipating this trend will continue and make Bitcoin a more attractive place for conservative investors to add to their overall portfolio.
Decoupling from Wall Street
Hougan also addressed concerns that Bitcoin has simply become a high-beta tech stock. He predicts that Bitcoin’s correlation with equities will fall in 2026, returning to levels where it acts as a true diversifier. While rolling correlation data has spiked during moments of macro stress, Bitwise expects crypto-specific drivers—such as regulatory clarity and adoption—to take the wheel next year, allowing digital assets to rise even if the broader stock market faces headwinds from valuation concerns.
A Look Back at 2025
The note also offered a candid retrospective on predictions of Bitwise for the current year. While the firm correctly identified the structural momentum—correctly calling Coinbase’s entry into the S&P 500, Strategy’s (formerly MicroStrategy) inclusion in the Nasdaq-100, and the passage of stablecoin legislation—its price targets proved overly aggressive.
While 2025 saw all three cryptocurrencies set new all-time highs—bitcoin at $200,000, ether at $7,000 and solana at $750—bitcoin, ether and solana ultimately missed Bitwise’s forecasts of those figures. Also, U.S. bitcoin ETF inflows did not exceed what they did in 2024, as Bitwise had anticipated. Nevertheless, according to Hougan, the structural victories achieved during 2025 will pave the way for another banner year for crypto in 2026.
