Zinger Key Points
- Traditional four-year crypto cycle suggests a 2026 pullback, but an expert believes institutional adoption could change the game.
- A shift in Washington’s stance on crypto could unlock trillions in institutional capital.
- Get Wall Street's Hottest Chart Every Morning
Matt Hougan, Chief Investment Officer at Bitwise, has argued the classic four-year Bitcoin BTC/USD cycle is evolving due to institutional adoption.
What Happened: In a thread on X on Friday, Hougan noted that historically Bitcoin has followed a pattern of three bullish years followed by a pullback, driven by driven by investor enthusiasm, leverage buildup and eventual deleveraging.
Each past cycle had a major catalyst, such as early exchanges in 2011 and ICOs in 2017 and ended with a crash, such as Mt. Gox in 2014, the SEC crackdown in 2018 and FTX in 2022.
The current cycle began in March 2023 when Grayscale's legal win against the SEC signaled that a Bitcoin ETF was inevitable.
The ETF launch in January 2024 fuelled massive inflows, traditionally suggesting a pullback in 2026.
However, this time is different due to a shift in Washington's regulatory stance, Hougan argues.
The exeuctive order issued by President Trump paves the way for clearer regulations and institutional entry.
Unlike retail-driven boom-and-bust cycles, institutional adoption moves slowly over years, not months.
With ETFs already attracting billions and regulatory clarity potentially unlocking trillions, Hougan believes institutional adoption may override the typical four-year cycle.
While leverage-driven excess will still emerge, any market corrections in the future may be shorter and less severe than in past cycles.
Also Read: Cathie Wood: ‘Bitcoin Is A Completely Different Animal,’ Regulations Are Necessary
What's Next: Hougan believes crypto is entering a new, mainstream era, with longer and more sustained growth rather than sharp boom-and-bust cycles.
While he is curious if institutions really start orienting to crypto next year, will there be a new crypto winter in 2026.
However, he remains unsure as the scale is too big.
Hougan acknowledges that the four-year cycle isn't disappearing entirely.
"Leverage will build up. Excess will appear. Bad actors will emerge. And at some point, that could get washed out, which will introduce volatility into the market," he said.
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