Bitwise CIO Discusses Crypto Market Dynamics

Bitwise Chief Investment Officer Matt Hougan commented on President Trump’s recent executive order regarding cryptocurrencies, suggesting it may challenge the traditional four-year market cycle.

> “If we were following the classic four-year cycle, 2025 would be a great year for crypto,” Hougan wrote in a note to clients on Wednesday. “We’re on the record predicting that bitcoin’s price will double this year to above $200,000, driven by flows into ETFs and bitcoin purchases by corporations and governments. That may turn out to be conservative.”

However, Hougan also noted early signs of market excess, mentioning that many companies are raising capital and debt to invest in bitcoin, alongside the rise in lending programs allowing holders to access their bitcoin wealth without selling. He pointed to increased activity in derivatives contracts and leveraged ETFs as indicators of a bubbling market.

Examining the Four-Year Cycle

Typically, Hougan stated this would affirm confidence in the traditional four-year cycle remaining intact. Yet, he views Trump’s crypto executive order—which established a task force to explore a U.S. strategic digital asset reserve—as a remarkably bullish signal for the market, prompting him to rethink his stance.

The executive order emphasizes the growth of the digital asset ecosystem in the U.S. and aims to create a clear regulatory framework for crypto.

> “The launch of ETFs was a big enough event to bring hundreds of billions of dollars into the crypto ecosystem from new investors,” Hougan observed. “But the full mainstreaming of crypto… will bring trillions.”

Historically, Bitcoin has followed a four-year cycle with alternating years of significant gains and subsequent pullbacks. Hougan remarked that 2023 and 2024 have been great for Bitcoin, suggesting that 2025 will also see upward movement. However, there are concerns regarding potential resets in 2026.

The Impact of Current Trends

The current cycle, which Hougan calls the ‘mainstream cycle,’ emerged from the fallout of the 2022 crypto collapse involving platforms like FTX and Three Arrows Capital and saw renewed interest after Grayscale’s legal victory in March 2023 regarding spot Bitcoin ETFs. These ETFs, launched in January 2024, drew institutional investments and substantially increased Bitcoin’s value from around $22,000 to over $100,000 within a year.

Future Challenges

In Hougan’s opinion, timing is the primary challenge ahead. While he acknowledges the optimistic shift in Washington’s stance on crypto, he cautions about its gradual impact. He questions whether a typical 70% market pullback is plausible, referencing BlackRock’s CEO and his bullish Bitcoin predictions.

Despite these uncertainties, Hougan believes the previous four-year cycle will still influence the market, though he anticipates shorter and shallower pullbacks as the crypto ecosystem has matured.

> “As for now, it’s full steam ahead. The crypto train is leaving the station,” he concluded.